Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

NEW WRIT

For Newbury, in the room of the hon. Mrs. Sybil Judith Chaplin, deceased.—[Mr. David Lightbown]

Oral Answers to Questions — FOREIGN AND COMMONWEALTH AFFAIRS

Russia

Mr. Ancram: To ask the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had with the Russian Foreign Secretary over the last four weeks on relations between the United Kingdom and Russia; and if he will make a statement.

The Minister of State, Foreign and Commonwealth Office (Mr. Douglas Hogg): My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs met Mr. Kozyrev in Moscow on 2 April, and will see him in Tokyo tomorrow, with our G7 partners. I also met Mr. Kozyrev in Moscow on 27 March. Our relations with Russia are excellent. In our contacts we have repeated our support for the economic and political reforms which President Yeltsin and his Government have pursued.

Mr. Ancram: I thank my right hon. and learned Friend for that full reply. Will he assure the House that, at this time of considerable political uncertainty in Russia in the lead-up to the referendum, he and my right hon. Friend the Foreign Secretary will make it clear to their counterparts that future aid, both technical and economic, from this country in particular and the west in general will be contingent on continued economic and political reform, continued improvements in human rights and swift withdrawal from the Baltic states?

Mr. Hogg: My hon. Friend is entirely right. The purpose of supporting economic change in Russia is, at least in part, to support the process towards genuine political pluralism. Therefore, we want to make it plain to all that our support is dependent on that continued process; at the same time, we want to ensure that such economic aid as we make available is most likely to underpin a genuine restructuring of the economy.

Mr. Winnick: Is there full agreement between Russia and Britain on the need for substantial progress in South Africa? Have the Russian Government and the British Government come to the conclusion that what happened over the weekend—the tragic assassination of Chris Hani—was a terrible disaster? I hope that the British

Government will make their views known clearly and publicly as soon as possible. Does the Minister agree that it should be made perfectly clear that the peace process in South Africa should continue—[Interruption.]

Madam Speaker: Order. The hon. Gentleman is totally out of order. The question relates to relations between the United Kingdom and Russia. If the hon. Gentleman has a question directed to that subject I shall hear it, but he must not abuse the House as he is doing.

Mr. Winnick: Does the Minister agree that both Russia and Britain should come to the conclusion that the peace process in South Africa should continue as quickly as possible?—[interruption]

Madam Speaker: Order. We will now move on. I call Mr. John Marshall.

Know-how Funds

Mr. John Marshall: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the know-how funds available for eastern Europe and the Commonwealth of Independent States.

Mr. Douglas Hogg: The purpose of the know-how fund is to support economic and political reform in central and eastern Europe, the former Soviet Union and the Baltic states. Since the fund was launched in 1989, we have spent more than £100 million. The budget for 1993–94 is £54.3 million.

Mr. Marshall: May I thank my right hon. and learned Friend for that answer and congratulate the know-how funds on being much more cost-effective than the European bank for reconstruction and development, the excesses of which are an affront to the people and the taxpayers of this country?

Mr. Hogg: I shall certainly accept that compliment in the spirit in which it was tendered.

Mr. Janner: Does the Minister know that the President of Lithuania, the governor of his bank and others are in this country at the moment searching for more help from the know-how funds and generally? Does the Minister accept that now is the time for such help to be given while those countries are on the path to democracy and seeking to remain with the west? If the Government wait too long, there may be disaster.

Mr. Hogg: I certainly agree that economic aid plays an important part in underpinning and supporting political reform. However, it is important to keep in mind the fairly limited nature of the know-how funds and their principal purpose, which is the transfer of technical know-how. That said, if the Lithuanians have proposals that they wish us to consider, I shall be willing to have them examined.

France

Mr. Oppenheim: To ask the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on relations with France.

The Minister of State, Foreign and Commonwealth Office (Mr. Tristan Garel-Jones): We enjoy close and friendly relations with France based on many shared interests, included membership of the European


Community, the Security Council, NATO, the Group of 7 and many other international organisations. In recent years close practical co-operation has increased as a result of the world-wide role of our two countries. We expect the close relationship to continue with the new Government.

Mr. Oppenheim: Is there not something faintly disreputable about a country which expects to be able to export a high proportion of the food that it produces but which takes minimal action against its own producers when they burn lorry loads of live English lamb and wreck consignments of fish? Should we not gently tell our French partners that they have no right to deny European consumers, who already subsidise them through taxes, a wider and freer choice of food by trying to wreck the GATT round which has been so painstakingly negotiated and which is so near to a successful conclusion?

Mr. Garel-Jones: France is our third largest trading partner. My hon. Friend is right in the sense that France has not only a population similar to that of the United Kingdom but similar consumer interests. I certainly believe that the French stand to gain more from an open market approach than from the sort of protectionist approach that my hon. Friend mentions. We have no reason to believe that the French Government are about to adopt protectionist policies. The new Government have inherited some difficult policy decisions but remain committed to working within the European Community framework for a successful conclusion to the GATT round.

Mr. Skinner: Is the Minister aware that it is no wonder that France has friendly relations with Britain when we consider that its trading surplus with us is very large and that we are running a trade deficit with France? Part of the reason for that is that we subsidise French electricity and then kindly buy an amount equivalent to about 6 million tonnes of coal. If this Minister and the Tory Government had any guts at all, they would tell the French that we intend to cut the interconnector and save the British pits.

Mr. Garel-Jones: This Minister and this Government believe in free trade. It is our intention and our policy, wherever possible, to ensure that the British consumer gets the best value, whether in energy, food or in any other matter.

European Foreign Policies

Mr. Knox: To ask the Secretary of State for Foreign and Commonwealth Affairs when he next proposes to have discussions with his European Community partners concerning the development of common European foreign policies.

Mr. Garel-Jones: We meet our European partners regularly to discuss the strengthening of intergovernmental co-operation on foreign policy.

Mr. Knox: Does my right hon. Friend agree that the foreign affairs and security provisions in the Maastrich treaty build on the concept of political co-operation, which was an important part of the Single European Act? Does he further agree that this country has played a major part in the development of that political co-operation?

Mr. Garel-Jones: My hon. Friend is absolutely right. European political co-operation and the single market

were two of the great achievements of the Single European Act. The Government have played and will continue to play a forward role in European political co-operation and in the common foreign and security policy when it is set up after ratification of the Maastricht treaty.

Mr. Charles Kennedy: Does the Minister agree that those of us who support ratification of the Maastricht treaty must be mindful of the criticisms being made of western Europe and the European Community—by, among others, Baroness Thatcher last night—in relation to the tragedy in the former Yugoslavia? Will the Minister take the opportunity to remind the House and others outside that what that means is that we must ratify Maastricht, build on those provisions and move towards a more united and coherent defence and foreign policy for the European Community as a whole so that tragedies of that nature within our own perimeter of influence can be much more urgently addressed?

Mr. Garel-Jones: I agree with the hon. Gentleman to the extent that he hopes for a peaceful settlement in Yugoslavia. That rests on the Vance-Owen initiative, which has been strongly supported by the European Community and this Administration.

Mr. Cyril D. Townsend: Has my right hon. Friend had an opportunity to discuss with his opposite number in Paris the possible withdrawal of General Philippe Morillon from his United Nations command in Bosnia? Will my right hon. Friend pay tribute to that highly controversial general, who, none the less, has shown great dedication to the cause of the United Nations and whose courage is exemplary?

Mr. Garel-Jones: I shall be travelling to Paris on Friday to meet my new opposite number. I will not hesitate to pay tribute to the courage and dedication of General Morillon.

Dr. John Cunningham: Does the Minister accept that, where possible, European Community foreign policies should be welcome and effective? In that connection, will he work with our European partners to construct a common foreign policy towards South Africa, and particularly to assist in progress towards a democratic, non-racial South Africa? Should not Europe unite in condemning the appalling brutal murder of Chris Hani, which is a tragedy for the whole of South Africa? Should we not also welcome the statesmanship of Nelson Mandela in appealing for calm and continued progress and work towards a democratic, non-racial South Africa?

Mr. Garel-Jones: I certainly join the right hon. Gentleman in applauding the approach that Mr. Mandela has taken. I think that Mr. Mandela and this Government are right to believe that the best tribute to the man who has been assassinated is to continue to pursue the peace process. Certainly the European Community, through the election monitors it has sent and the police training it has offered, is supporting the democratic forces for change in South Africa.

Mr. Peter Bottomley: Returning to the question put by the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy), does my right hon. Friend agree that what is needed is not just the courage shown by the French general and many of the troops of all nations in the United


Nations force in the former Yugoslavia, but to build on the emotional demands for a rational way forward so that we make matters not worse but better?

Mr. Garel-Jones: I certainly agree with my hon. Friend. Like me, he will not be surprised that many Members and also people outside the House feel very strongly about what is going on in the former Yugoslavia, given the horrific nature of the events taking place there. Nevertheless, the course that the Government and the European Community have pursued—that of support for the Owen-Vance initiative, difficult furrow though it is to plough—is the right one.

Middle East

Mr. Watson: To ask the Secretary of State for Foreign and Commonwealth Affairs what further steps he is planning in support of the middle east peace process.

Mr. Streeter: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the progress of the middle east peace conference.

Mr. Douglas Hogg: The American and Russian co-sponsors of the middle east peace process have issued invitations to a further round of bilateral negotiations in Washington on 20 April. The Israelis have accepted the invitation. The Arab parties are in Washington this week for consultations, which we hope will result in their agreement to resume negotiations.

Mr. Watson: Will the Minister join me in welcoming the acceptance by the Israeli authorities of the appointment of Mr. Feisal Husseini as leader of the Palestinian delegation to the peace talks? Does the Minister accept that that gives at least some hope of a way forward, particularly as Mr. Husseini is from east Jerusalen and is a resident of that city? In terms of legitimising the position of east Jerusalem as an occupied territory, in line with EC policy, can the Minister confirm that one way to move forward the peace talks would be for President Clinton to urge the Israeli authorities to adopt resolutions 242 and 338 so that the peace talks could begin to move forward in a meaningful way?

Mr. Hogg: I had the pleasure of meeting Mr. Feisal Husseini a little whole ago. I certainly recognise the important role that he plays in the peace negotiations and I welcome any step that promotes that role. As to resolutions 242 and 338, it is important for all of us to recognise that negotiations within the peace process must move forward on the basis of those two Security Council resolutions.

Mr. Streeter: While recognising the frustration of many Palestinians, does not my right hon. and learned Friend roundly condemn the recent murderous attacks on Israeli citizens and soldiers in parts of the occupied territories? Does he agree that that does not contribute to the peace process? Will my right hon. and learned Friend continue to put pressure on moderate Palestinian leaders to reduce the level of violence and give peace a chance?

Mr. Hogg: My hon. Friend makes a very real point. About 69 Palestinians and 22 Israelis have been killed since the beginning of this year. That is lamentable. Escalating violence is something that we all deplore as

strongly as we can, and it reinforces the importance of all the parties getting back into bilateral talks as speedily as possible.

Mr. Ernie Ross: The Minister will have seen reports in the press at the weekend of the death of Mohammed Suweiti, a citizen of Hebron, who was unable to travel from Hebron to Jerusalem for essential hospital treatment because of the closure of the west bank. Does the Minister not agree that the closure of the west bank and the division of the occupied territories into three is itself a form of collective punishment? If we are to encourage the Palestinians to return to the peace table, does the Minister agree that one of his roles is to seek assurances from the Israeli Government that they, as an occupying power, accept their responsibilities under the fourth Geneva convention?

Mr. Hogg: On the latter part of the hon. Gentleman's question, yes, indeed—the fourth Geneva convention applies to the occupation by the Israelis of the occupied territories. To take the hon. Gentleman's question more broadly, he is right indeed to deplore the fact that both Gaza and the occupied territories have been closed and that the flow of occupants of those two areas into Israel where previously they worked is very restricted. That will not promote a peace settlement. We need to do all that we can to persuade the Israelis to lift the burden of the occupation.

Mr. Rathbone: In the light of the Palestinian slaughter and the deportation of Palestinians from Israel, can my right hon. and learned Friend tell us how the talks with representatives of the Palestinian Liberation Organisation are going?

Mr. Hogg: I am not quite sure to which group of people my hon. Friend is referring at this point. What we want to do is to see all the parties to the bilaterals return to those bilaterals as speedily as possible. That means accepting the invitation to attend on 20 April.

Mr. George Robertson: May I reinforce two of the points that the Minister has made to the House? First, I join him in condemning all the violence in the occupied territories and in Israel, wherever that violence comes from; none of it helps the peace process, nor will it lead to an ultimate solution for either side. Secondly, I join him in welcoming the reports that the Israeli Government are willing to recognise that Mr. Feisal Husseini, a resident of east Jerusalem, should be given his rightful position as the spokesman and leader of the Palestinian community in those talks. That would be a step forward—as would the rumoured move by the Israeli Government to allow some long-standing exiled deportees to return to their native land for the first time in many years. As the Minister pushes the urgency of the middle east peace process further and further up the agenda, notwithstanding all the competition that it faces, will he ensure that the Israeli Government comply both with international law and with international civilised standards so as to ensure that whatever punishment they mete out to the civilian Palestinian population is not so disproportionate as the present decision to close off the occupied territories seems to be?

Mr. Hogg: I thank the hon. Gentleman for his first two points and for the support that he has given the


Government. I agree entirely about welcoming the possibility of allowing people who were deported some considerable time ago to return to Israel and I agree with the general point about the proportionality of any response to acts of violence, but it would be very much easier for the Israeli Government to make progress in the talks if the violence being committed by the Palestinians were to stop.

Mr. Batiste: Does my right hon. and learned Friend agree that the peace process in the middle east would be much enhanced if all middle eastern states signed the international convention banning chemical weapons and had equal opportunities to participate in the watchdog organisation set up under that convention? What steps is he taking to promote that process?

Mr. Hogg: The point that my hon. Friend makes about the chemical convention, in particular—and, by implication, weapons of mass destruction in general—is wholly correct. We want all the parties to ratify, and thereafter implement, the chemical warfare convention. We must work to achieve the removal from the middle east of weapons of mass destruction, but those desirable and essential objectives are unlikely fully to be achieved unless and until there is a general settlement within the framework of the current peace process.

Maastricht Treaty (Danish Referendum)

Mr. Salmond: To ask the Secretary of State for Foreign and Commonwealth Affairs what recent discussions he has had with the Danish Government about the forthcoming referendum on the Maastricht treaty.

Mr. Garel-Jones: My right hon. Friend the Foreign Secretary discussed this and other issues with the Danish Foreign Minister, Mr. Helveg Petersen, in London on 22 March.

Mr. Salmond: Did the Foreign Secretary at any stage communicate to his Danish counterpart the view held by Members both for and against Maastricht and also substantially by people outside the House—that Maastricht is exactly the sort of constitutional issue which should be decided by the people in a referendum? Is there any prospect of the Government accepting that strong viewpoint and changing tack, or will they merely depend on Labour Front-Bench spokesmen to bail them out in the vote next week?

Mr. Garel-Jones: No, there is no such prospect: the Government, like previous British Governments, will depend on the will of the House.

Sir Teddy Taylor: Has the Minister been able to clarify whether it remains the position of the Government that they will not seek to invite the House to approve the Third Reading of the European Communities (Amendment) Bill until after the Danes have had their second referendum? Is that still the position?

Mr. Garel-Jones: Yes, that remains the position.

Mr. Spearing: Does the Minister recall that in a recent written answer he stated that the obligations placed on Denmark by the treaty on European union signed at Maastricht were not changed by the decision reached intergovernmentally at Edinburgh? In that case, will not

the question that the Danish people have to answer on 18 May be substantially, if not exactly, the same as they answered previously?

Mr. Garel-Jones: I recall that answer, but the question put to the Danish people and the answer that they give are matters for the Danish Government and the Danish people and not for me.

Hong Kong

Mr. Anthony Coombs: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the Governor of Hong Kong's constitutional proposals for the colony.

The Minister of State, Foreign and Commonwealth Office (Mr. Alastair Goodlad): We support the Governor's proposals for broadening democracy in Hong Kong. We have long wanted to hold discussions with the Chinese Government on these proposals with the aim of achieving a smooth transition in 1997. We and the Chinese Government announced yesterday that talks on these issues will start in Peking on 22 April.

Mr. Coombs: Does my right hon. Friend agree that the fact that talks are now resuming with China vindicates the firm position taken by the Governor of Hong Kong on extending democracy in Hong Kong? Will my right hon. Friend confirm that representatives of the Hong Kong community will be at the negotiations, and will he ensure that the Chinese do not use the negotiations as a means of prolonging the process to prevent the introduction of the electoral law and the widening of democracy in the 1995 elections in the way that the Governor wishes?

Mr. Goodlad: I am grateful to my hon. Friend for his opening remarks. As we have said, the talks are between the two sovereign powers. The British representative will be Sir Robin McLaren, Her Majesty's ambassador in Peking. Other officials from the British and Hong Kong Governments will participate in the talks in exactly the same way as they have in the past.
On the question of timing, we and the Hong Kong Government need to have legislation in place in good time for the district board elections in 1994 and the Legislative Council elections in 1995. We therefore want quick progress, but there is quite a lot of difficult ground to cover.
We are going into these talks with the aim of reaching an understanding, but not at any price. It remains an essential point for us and the Governor that elections held under British administration should be fair, open and acceptable to the people of Hong Kong.

Dr. Bray: Is it the Government's intention to continue to consult widely the people of Hong Kong, including their elected representatives in the Legislative Council, during the progress of the talks with China?

Mr. Goodlad: Yes, Madam Speaker.

Mr. Ian Bruce: Can my right hon. Friend tell the House whether he feels that the Chinese Government are keeping to the letter and spirit of the treaty between the Government and the Chinese Government on the handover of Hong Kong's sovereignty in 1997? Judging from China's record so far, does he believe that China will


keep to the treaty after the handover? Do we have any way of renegotiating the treaty or getting out of it if we feel that China is not meeting its obligations?

Mr. Goodlad: The Chinese leaders say that they will abide by the joint declaration and the Basic Law. Under the joint declaration, we are of course responsible for administering Hong Kong until July 1997.

Mr. Rogers: We warmly welcome the recommencement of talks as laid out in the proposals announced yesterday. However, may I say that we hope that, during future negotiations, the minimal democratic propositions put forward by the Governor are at least adhered to and that, in whatever negotiations come about, the people of Hong Kong will finally have a say, rather than the British Government alone?

Mr. Goodlad: I am grateful to the hon. Gentleman. As I said, our aim is to reach an understanding with China on arrangements to ensure that the elections will be fair, open and acceptable to the people of Hong Kong. If we reach an understanding with China, the British and Hong Kong Governments will recommend it to the Legislative Council and it will be for it to pass the necessary legislation.

Bosnia

Mr. Illsey: To ask the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the United Kingdom's involvement in Bosnia.

Mr. Douglas Hogg: Britain is playing a major role in efforts to restore peace in Bosnia and to provide humanitarian relief for millions of civilians caught up in the conflict. We are the largest single national troop contributor to the United. Nations protection force in Bosnia, escorting relief convoys. Our troops and aid workers are doing a magnificent job in difficult and often dangerous circumstances. We have also devoted considerable material resources to the aid operation.

Mr. Illsley: Will the Minister take this opportunity to distance the Government from the suggestions made by Baroness Thatcher which, if implemented, would perhaps lead to an extension of the conflict in Bosnia, to the further killing of military and civilian personnel and would perhaps jeopardise the humanitarian aid effort? Does he also agree that the situation in Bosnia cannot be allowed to continue and that existing sanctions should be properly enforced and tougher sanctions implemented?

Mr. Hogg: The broad nature of the policy that we are currently pursuing is, I think, the right one and the one to which we should hold. We need to continue to put all the pressure that we can on Serbia to get Serbia to induce the Bosnian Serbs to sign up to the Vance-Owen plan. That must be the heart of the policy. I think, too, that it is desirable that the sanctions be yet further tightened. As the hon. Gentleman will know, there is a draft resolution to hand, but, for reasons that. I think are good, it has been decided to defer the vote on the resolution until the end of April—but I hope that if the resolution is passed its implementation will be immediate and that no grace period, has proposed in the original draft, will be provided.

Mr. Cormack: I do not wish to do anything other than praise the bravery of our British troops, but may I ask my

right hon. and learned Friend to agree that our right hon. and noble Friend Baroness Thatcher, with whom I do not always agree, spoke for many people yesterday when she talked of the sense of horror and shame that people throughout this country feel when they see our troops having to stand by while women and children are shot down? Will my right hon. and learned Friend talk to the Foreign Secretary on the telephone today and ask him to summon an urgent meeting of his fellow Foreign Ministers so that we can begin to act a little more effectively?

Mr. Hogg: My hon. Friend is clearly right when he describes what is going on in Bosnia as a tragedy and a crime. I do not suppose that a more appalling set of events has taken place since the end of the second world war. But on the question of shame—no, I cannot agree with him, because I look at what British troops in Bosnia are doing. We have 2,600 men there performing acts of great courage and gallantry. We—or rather, I should say, they—have escorted some 448 convoys conveying something like 33,399 tonnes of supply. I am proud of that contribution.

Mr. Jim Marshall: Does the Minister accept that Lady Thatcher is not alone in believing that the present arms embargo plays into the hands of the Croats and the Serbs, and places the Bosnian Muslims at a great disadvantage? Does he further accept that there is an increasing feeling that the arms embargo should be partially lifted so that the Bosnian Muslims will at least be able to defend themselves against the atrocities being committed against their nation?

Mr. Hogg: I do not try to deny that a case can be argued for lifting the arms embargo, but I put to the House two considerations that point in the opposite direction. The first is that if we were to lift the arms embargo for the Bosnian Muslims I believe that others would speedily supply arms to the Croats and the Bosnian Serbs. That would not bring about an early ceasefire. The second consideration, which I find even more persuasive, is that it would take time for the arms to be delivered to the Bosnian Muslims and even more time for those people to be trained and expert in their use. I ask what would happen in the meantime; and I answer that rhetorical question by saying that the Bosnian Serbs would be likely to redouble their aggression so as to grab yet more land against the possibility that the Muslims might be in a better position thereafter.

Mr. William Powell: Is my right hon. and learned Friend aware of the continuing horror caused by the evidence of alleged war crimes in the former Yugoslavia, not least that now forwarded by the International Red Cross to the special commissioners appointed under UN resolution 780? Is he aware that under resolution 808 the Secretary-General has to report by 22 April on the proposals to establish an ad hoc tribunal to try and, if necessary, punish people alleged to have been engaged in war crimes? Will he do all that he can on behalf of the British Government to ensure that such a tribunal is established as quickly as possible?

Mr. Hogg: I am, indeed, aware of the resolution. I am also aware that the Secretary-General has been commissioned to report back to the Security Council by the end of April on ways in which to carry forward the holding of a war crimes tribunal. I think that that is an important object of policy and, to the extent that it is


possible—one must recognise the difficulties—that people who are guilty or who are alleged to be guilty of war crimes need to be brought before that tribunal and punished appropriately.

Dr. John Cunningham: Do not the Government recognise that even for those of us who have supported the peace process and the decisions of the Security Council, the policy of the United Nations appears to be falling apart in Bosnia? Is not it clear that sanctions are being widely breached by certain countries, including Russia, and should not any aid to Mr. Yeltsin be contingent on his obeying the mandatory sanctions against Serbia imposed by the Security Council?
Is not it also clear that the humanitarian aid programme is in danger of failing not because the High Commissioner has not organised convoys, but because members of the United Nations, including members of the European Community, have failed to keep their promises to provide food aid for Bosnia? Are we to stand aside and watch the slaughter of perhaps 50,000 innocent civilians in Srebrenica? Are not those all reasons why we should have an immediate recall of the Security Council to discuss the deteriorating situation in Bosnia? Is not it deplorable that the Government have agreed to delay those discussions in the Security Council for two weeks, apparently at the request of Mr. Yeltsin?

Mr. Hogg: Our purpose—it must be—is to achieve continued consensus within the Security Council, because it is only by maintaining a united front between the five permanent members that we can hope to continue to place great pressure on Serbia. Against that background, we must consider the request by the Russian Government not to put the matter to the vote until the end of April. Our purpose must be to keep Russian consent, because if we lose it, the ability of the Security Council to act effectively will disappear entirely. That is the thinking behind our decision to accede to the Russian request. I believe that it was a right decision.

United States

Mr. Riddick: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on relations beween the EC and the USA.

Mr. Garel-Jones: EC-US relations are close, crucially important and wide ranging, including especially trade relations and political dialogue. We are committed to maintaining and developing this relationship on the basis of the November 1990 EC-US declaration which sets out shared aims and principles. The next EC-US summit will take place in Washington on 7 May.

Mr. Riddick: Does my right hon. Friend agree that it is vital for both the European Community and the United States that there is a successful outcome to the negotiations on the general agreement on tariffs and trade? Will he confirm that the Government will do everything in their power to ensure that the protectionist tendencies of Mr. Delors, of French politicians and of some within the Clinton Administration are not allowed to stand in the way of a successful outcome to those negotiations?

Mr. Garel-Jones: I certainly agree with my hon. Friend about the importance of a successful conclusion to the GATT Uruguay round. I assure him that the Government

will continue to give the highest priority to that. The initial signals coming from the new United States Administration are encouraging. The trade representative, Mr. Kantor, recently confirmed President Clinton's commitment to a more open trading system and to the successful conclusion of the Uruguay round. He also confirmed the United States Administration's commitment to seeking an extension to the fast track authority, which is also a very positive step.
As I said to my hon. Friend the Member for Amber Valley (Mr. Oppenheim), the new French Administration have inherited some difficult problems from their predecessors. I am convinced that France has as much to gain as any other country in the Community from a successful conclusion to the Uruguay round, not least because it is the largest exporter of services in the whole of the European Community and would have a great deal to gain from a successful conclusion to this round.

Mr. Hain: But could the Minister press for a joint initiative between the EC and the United States of America to put pressure on the South African Government to ensure that white terrorism is rooted out from both the community and the security forces? The tragic death of Chris Hani over the weekend is a clear example of the way in which white terrorists are being assisted——

Madam Speaker: Order. I have again to call an hon. Member to order. The hon. Gentleman started out reasonably but moved so far away from the question that his remarks really were out of order. I ask all hon. Members to look at the questions very carefully, and not to try to put one over on the Speaker, as they sometimes do.

Several hon. Members: rose——

Madam Speaker: No. We will now move on.

South Korea

Mr. Bellingham: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on Britain's relations with South Korea.

Mr. Goodlad: Our relations are excellent. My right hon. Friend the Foreign Secretary paid a successful visit to the Republic of Korea last week. He had full and useful exchanges with—among others—the President, the Foreign Minister and the Defence Minister. As well as bilateral matters, their discussions covered regional and international issues, including North Korea, market access, trade, technology co-operation, investment and the European Community. This was a very good opportunity to establish contact with the new South Korean Administration. My right hon. Friend also met and had useful discussions with representatives of the British business community.

Mr. Bellingham: I am grateful to my right hon. Friend for that extremely informative reply. Does he share South Korea's grave concern about North Korea's threatened withdrawal from the non-proliferation treaty? Does he agree that that poses the threat of destabilisation throughout the region and that there is an urgent need for the International Atomic Energy Agency to move in and


carry out an inspection? Will he seek the support of the Government of the People's Republic of China in putting pressure on North Korea?

Mr. Goodlad: Yes. North Korea's announcement of its intention to withdraw from the non-proliferation treaty is a cause for great concern and its refusal to allow the International Atomic Energy Agency's special inspections gives further cause to question the intentions of the North Korean Government. The United Kingdom is determined to maintain and strengthen the non-proliferation treaty. We urge North Korea to reconsider its position and we intend to explore all possible avenues with our Security Council colleagues to persuade North Korea to change its mind.
My hon. Friend is quite right that China has a vital role to play in attempts to persuade the North Koreans to reverse their position and we look to the Chinese to exercise that responsibility. We also attach the greatest importance to full co-operation among all states on the Security Council, especially the permanent five.

Hong Kong

Mr. Colvin: To ask the Secretary of State for Foreign and Commonwealth Affairs when and where he intends to have talks with the Government of the People's Republic of China on the development of democracy in Hong Kong; and if he will make a statement.

Mr. Goodlad: We and the Chinese Government announced yesterday that talks on Hong Kong's electoral arrangements will begin in Peking on 22 April. Our aim will be to reach an understanding with the Chinese side on arrangements which will ensure that elections are fair, open and acceptable to the people of Hong Kong. If we can reach such an understanding, we and the Hong Kong Government will recommend it to Hong Kong's Legislative Council. It will be for that body to pass the necessary legislation.

Mr. Colvin: Will my right hon. Friend confirm that although it was the Governor who tabled the proposals for constitutional change in Hong Kong, those proposals were, none the less, the recommendations of Her Majesty's Government and have the broad support of hon. Members on both sides of the House? Furthermore, they are within the Basic Law. If the People's Republic of China thinks otherwise, it would help the proposed talks if the Chinese were to be specific about the respects in which they think that the proposals depart from the Basic Law so that those matters can be addressed in detail before the talks take place.

Mr. Goodlad: My hon. Friend is correct in every particular.

Mr. Kaufman: The Minister keeps talking about reaching an understanding with China. Is it not a fact that any understanding with China can result only in a further watering down of proposals that were already grossly inadequate in terms of what the Hong Kong Legislative Council and OMELCO have asked for? Is it not also a fact that continual caving in to Chinese tactics of delay and dilution will result in there being very little democracy indeed to be handed over in 1997?

Mr. Goodlad: The right hon. Gentleman's views are well known to the House. I can reiterate only that the outcome of the talks will be placed before the Legislative Council in Hong Kong and will, we hope, be acceptable to the people of Hong Kong.

Peru

Mr. McFall: To ask the Secretary of State for Foreign and Commonwealth Affairs when he last met the Peruvian ambassador to discuss the democratic process in that country.

Mr. Garel-Jones: My right hon. Friend the Foreign Secretary last discussed Peru with the Peruvian ambassador on 18 November 1992. I visited Lima from 7 to 9 January and was able to assess the progress that Peru has made in restoring democratic government.

Mr. McFall: Is the Minister aware that when I visited Peru last year, I witnessed for myself the evil which the Sendero Luminoso is perpetrating on the people of Peru? However, there is no social welfare programme in that country, and the more President Fujimori goes ahead with his proposals and ignores the social reality, the worse it will be for the western world, particularly in relation to drugs. When the Secretary of State next meets the ambassador, will he impress on him the overall need for democracy in Peru so that that helps the people of that country?

Mr. Garel-Jones: I am grateful to the hon. Gentleman for his perfectly correct remarks about Sendero Luminoso which is probably the most horrific terrorist organisation operating anywhere on the globe today. We must recognise that since the autumn coup—as I believe it is called—President Fujimori has made progress in the restoration of democracy and the new constitutional assembly holds out considerable hope for the future of Peru. When I was there, I was able to speak not only to the Speaker of that assembly, but to a number of human rights groups. I agree with the hon. Gentleman that, in the end, although the activities of Sendero Luminoso may be challenging and deeply repulsive, the route to its defeat must be through the proper restoration of full democratic human rights in Peru.

Malaysia

Sir Fergus Montgomery: To ask the Secretary of State for Foreign and Commonwealth Affairs what recent discussions have taken place with the Government of Malaysia on United Kingdom-Malaysian relations.

Mr. Goodlad: I visited Malaysia from 1 to 5 April and was able to see at first hand that our relations with Malaysia are excellent. I met the Minister of Finance, Mr. Anwar Ibrahim—who had himself visited the United Kingdom earlier this year—and had wide-ranging discussions with him and a number of his ministerial colleagues. I also visited the free trade zone in Penang and the Forestry Research Institute of Malaysia.

Sir Fergus Montgomery: Is it not important that British firms should try to secure contracts in respect of the new Kuala Lumpur airport? What are the Government doing to assist?

Mr. Goodlad: My hon. Friend is absolutely right. There is plenty of scope for British firms to increase British business in Malaysia; the new planned airport at Sepang is an important example of that. In February, my right hon. Friend the Prime Minister offered up to £42 million-worth of grant finance to be used in association with export credits and contracts that may be awarded to British companies of up to £120 million-worth of United Kingdom goods and services for the planned new airport. Any firm commitment will be subject to the usual appraisal procedures and contacts with our Organisation for Economic Co-operation and Development partners in line with internationally agreed rules on the provision of tied aid. I very much hope that our companies will be successful.

Mr. Dalyell: As the Minister said that he visited the forestry institute, what did it say about the rate of logging and the truction of rain forest in Sabah and Sarawak Wand on the Malaysian mainland?

Mr. Goodlad: Nothing, Madam Speaker.

Serbia and Montenegro

Mr. Mackinlay: To ask the Secretary of State for Foreign and Commonwealth Affairs what action he proposes to improve the effectiveness and impact of United Nations and European Community sanctions against Serbia and Montenegro.

Mr. Douglas Hogg: We have provided customs personnel to the sanctions assistance missions, which are helping Serbia's neighbours enforce sanctions more effectively, and £100,000 to establish a communications network along the Danube. I am confident -that sanctions against Serbia and Montenegro are already having an impact, but sanctions may need to be,tightened still further to put pressure on the Serbs to sign- the Vance-Owen plan; further action is under consideration in New York.

Mr. Mackinlay: Has the Minister had an opportunity to read the report of the debate in European Standing Committee B which, a few weeks ago, probed the Government on the policing and implementation of sanctions against Serbia and Montenegro as they relate to this country? It was shown that there was an hiatus and an unsatisfactory system of controlling and policing exports from the United Kingdom to the former states of Yugoslavia. Further, there was an indication from the Minister that Greece was, to say the least, sloppy in its policing of the sanctions regime. Will the Minister bear that in mind and tell us whether the Government have taken measures to ensure that the United Kingdom is rigorously applying the sanctions against Serbia and Montenegro and that there is no sloppiness on behalf of the United Kingdom?

Mr. Hogg: It is certainly our intention rigorously to impose sanctions and I am not aware of any shortcomings. If the hon. Gentleman—or any other hon. Member, for that matter—has evidence of substantial shortcomings, the Government will be anxious to look at it.
The point has been made to Greece on a number of occasions that it is important that all Community members most vigorously and rigorously eforce the sanctions. As the hon. Member for Thurrock (Mr.

Mackinlay) knows, there is a draft resolution in New York that will further tighten the sanctions regime if it is voted for in the Security Council.

Mr. Dickens: Does my right hon. and learned Friend agree that it is one thing to have tight sanctions to try to bring the parties in the former Yugoslavia to their senses and to a peaceful resolution, but that it is another thing to start talking from the comfort of another place about military intervention, which would mean that the fighting forces in Yugoslavia would move into the towns where the bombing would be on civilians and children?

Ms Eagle: It already is.

Mr. Dickens: Yes. Does my right hon. and learned Friend agree that many people in the United Kingdom and, indeed, the Chamber would be aggrieved if the British armed forces were used in a warlike manner in the former Yugoslavia? The people who are crying for military intervention would soon be crying for the bodies of our men and women if they, were returned in body bags to Southampton and other 'airports.

Mr. Hogg: I agree with a lot of what my hon. Friend said. It seems that there are two different sorts of military action that one should consider. The first is whether it would be right to deploy United Kingdom ground troops in an aggressive role—and then the question is whether it would be right in what is effectively a civil war to take action that would condemn probably a substantial number of British soldiers to die. That is a question which the House must consider. My view is that it would not be right.
A different question is whether it would be right in any circumstances to use air power. That question is constantly kept under review because there is a case to be made for it. Against that, there are serious disadvantages associated with that policy. So far, it has been held—in my view, rightly—that the disadvantages outweigh the advantages.

Ms Short: Does the Minister agree that there are awful parallels between Europe's failure to protect the jews before the second world war and our failure to protect the Bosnians from the systematic use of rape and ethnic cleansing? Is it not proposed that massive ground forces will be put in place if the Vance-Owen proposals are carried? The Serbs are refusing to accept implementation of those proposals. Can we not have an alternative plan at least to create some safe havens for the Bosnians?

Mr. Hogg: There is a distinction to be made between deploying troops in a peacemaking role and deploying troops in a peacekeeping role. So far as the latter is concerned, if there were a genuine agreement and a sustainable ceasefire, and if there were substantial troop contributions from a number of other countries—most notably the United States—and the control and command mechanisms seemed right, we should look sympathetically at a proposal that British troops should be used in a peacekeeping role.
There is a major distinction between that operation and what the hon. Lady is referring to, which is to use troops in a peacemaking role—to enforce peace by military action. I ask the hon. Lady rhetorically: is it right to condemn British soldiers to die for that purpose? I say no.

Commonwealth of Independent States

Ms Eagle: To ask the Secretary of State for Foreign and Commonwealth Affairs what plans Her Majesty's Government have to support and assist the independent republics of the CIS to ensure a smooth transition to democracy.

Mr. Douglas Hogg: We fully support the development of democratic and economic reforms in all the countries of the former Soviet Union. We contribute to this process through our bilateral aid programmes, such as the know-how fund, and play a substantial part in multilateral efforts. We are doing all that we can to foster contacl.s and exchanges with the newly independent states through international forums to support democratic processes.

Ms Eagle: Following the demise of the Soviet Union, there is great instability in the former Soviet states that are now independent within the Commonwealth of Independent States. One of the problems is that Ukraine

and Kazakhstan have access to nuclear weapons. What is the Government's opinion on trying to force these states to sign strategic arms reduction talks in exchange for aid so that we can help them on the path to democracy and alleviate their poverty?

Mr. Hogg: The hon. Lady is right with her general point that there is instability. We look to the conference on security and co-operation in Europe as the instrument most likely to provide the solution of regional and ethnic problems in the former Soviet Union.
As for nuclear-weapon states, our real concern is focused on Ukraine. That is because the tension between Ukraine and Russia is increasing. The view is expressed in the Ukrainian Parliament that Ukraine should not relinquish its nuclear weapons while there is the tension to which I have referred. We regard that as a disastrous mistake. We shall do all that we can, both by way of negative security assurances and by persuasion, and to some extent by assistance, to persuade the Ukrainians to sign the non-proliferation treaty as a non-nuclear state.

Bosnia

The Secretary of State for Defence (Mr. Malcolm Rifkind): With permission, I should like to make a statement.
The House will share the Government's feelings of outrage at the artillery attack on Srebrenica on Monday, in which, according to reports, at least 56 people were killed and 70 wounded. That was a new milestone of inhumanity in a conflict which had already spawned many atrocities. On that occasion, as on many others, the Bosnian Serbs appear to have been responsible. We should remember that the Serbs in Bosnia are not uniquely guilty, although they bear the main responsibility for current events in Bosnia. The other parties too have committed crimes. Indeed, the British soldier who was killed in January while escorting a convoy of sick and wounded did not fall to a Serbian bullet.
It is not for want of effort by the international community that those horrors continue. The Government have been at the forefront of these efforts. The London conference last August, co-chaired by my right hon. Friend the Prime Minister, renewed the search for a negotiated settlement of the conflicts in former Yugoslavia—not only in Bosnia. Since then, the Government have given its fullest support to the efforts of Lord Owen and Mr. Vance to achieve such a settlement.
Success seemed in sight three weeks ago, when the Bosnian Muslims joined the Bosnian Croats in signing all the elements of the Owen-Vance peace plan. It is a matter of the deepest regret that the Bosnian Serbs have not yet been prepared to sign. I hope that, even at this late stage, and despite all that has happened, they will be prepared to reconsider.
Meanwhile, our armed forces have played a leading and distinguished part both in bringing relief to the suffering in Bosnia and in enforcing the arms embargo against the whole of former Yugoslavia and the wider sanctions against the Federal Republic of Yugoslavia. Since November, the Cheshire battalion group has escorted more than 33,000 tonnes of food and other humanitarian aid to destinations in Bosnia. RAF Hercules aircraft have flown 427 sorties to Sarajevo, and delivered nearly 6,000 tonnes of aid. Ships of the Royal Navy, assisted by airborne early warning and maritime patrol aircraft of the Royal Air Force, have patrolled the Adriatic and its surrounding air space, alongside allies in NATO and the Western European Union, to enforce the embargo and the sanctions.
Earlier this week, pressure on the warring factions was increased, when NATO aircraft began patrolling Bosnian air spac.: to enforce the no-fly zone, in accordance with Security Council resolution 816. RAF Tornado F3s and tankers are on standby to fly to bases in Italy to join in that operation when called forward by SACEUR to do so.
The Government fully share the widespread frustration that diplomacy and military pressure have not yet succeeded, and that the suffering still continues. Other weapons are available. The sanctions noose is being drawn tighter against Serbia, whose future is grim—she faces isolation and economic ruin.
At the same time, the House will recognise that there are no easy solutions to a conflict in which all three ethnic groups have willingly engaged and which has many of the

characteristics of a civil war. If there had been, the international community would have applied them long ago. Some argue that, if the outside world is not prepared to intervene militarily, it should at least refrain from enforcing an arms embargo that is bound to favour the Serbs, since they have access to the arsenals of the Yugoslav national army.
That is an understandable argument, but we should be clear where it leads. Removal of the United Nations arms embargo would certainly result in the Bosnian Muslims being free to acquire all the weapons they needed. Presumably, the Bosnian Serbs for their part would also seek more arms from other countries. The result would be to prolong the conflict and to make it even bloodier and more vicious than it is today, bringing continuing suffering to innocent civilians.
In those circumstances, it is difficult to see how UNPROFOR's humanitarian mission could continue. The chances of negotiating aid through the front lines, as at present, would be sharply diminished. Meanwhile, the international consensus would almost certainly have been lost. The United Nations' efforts in former Yugoslavia so far have been made possible by Russian willingness to support the necessary resolutions and to put pressure on the Serbs. That co-operation has been invaluable, but, given the internal situation in Russia, it cannot be taken for granted. It would be unlikely to survive an escalation of the conflict through the removal of the arms embargo.
There have also been calls for the use of air strikes to enforce a peace settlement. There could be circumstances in which the selective use of air power would be relevant. NATO, at the request of the United Nations, is enforcing the no-fly zone at the present time, but the clear military advice received by the Government is that air strikes unsupported by substantial numbers of troops on the ground would be unlikely to be effective given the nature of the conflict, the weapons deployed and the terrain. The chances of civilian casualties would be high. Meanwhile, the risks to British and other United Nations troops, and to the success of the humanitarian relief operation, would remain. While one should not rule out that expedient absolutely, it is one that would change in a fundamental way the role of the UN and bring it into the heart of the conflict as a combatant.
The right course to pursue is the current policy, thankless and frustrating though it is. Diplomacy must continue. Pressure on those responsible for prolonging the conflict must be increased. The plight of the suffering must be alleviated. The international consensus necessary to do all those things must be maintained. They will continue to be the Government's objectives.

Dr. David Clark: I am sure that I speak for the whole House when I say how appalled we all were to see the maiming and murder of innocent victims in Srebrenica and elsewhere in Bosnia. It reminded us graphically of the barbarity of war, and behoves us to redouble our efforts to make sure that this particular war ends as speedily as possible.
We would like to be associated with the Secretary of State's comments about our own troops in Bosnia. The right hon. and learned Gentleman was right to highlight their bravery and fortitude. At no small risk to themselves, those troops ensured that thousands of tonnes of


humanitarian aid got through and saved many lives. It is true to say that, thankfully, our worst fears about starvation have not been realised.
But that raises another point. There have been reports that the United Nations is now running out of food. If that is the case, what are her Majesty's Government doing about that? Is it not offensive that thousands of tonnes of food are rotting away in EC intervention stores when people in Europe are starving? Will the Minister take that on board and see what can be done?
The Secretary of State is right when he says that we cannot lift the arms embargo to the Muslims. It has always seemed to us rather crazy to try to douse a fire with petrol. It never works Will he confirm that much weaponry is already in the hands of the 190,000 fighters from the three sides of the bloody conflict? Will he further confirm that planes with middle east markings and carrying arms have landed in Croatia?
The Secretary of State is also correct to rule out the use of ground troops before a peace agreement has been made. If it is envisaged that 70,000 troops will be needed to keep the peace after an agreement, has the Secretary of State made any estimate of the number of troops required to contain the fighting before the agreement has been made?
Does the Secretary of State accept that this civil war cannot be solved by external military intervention? If so, why are the Government so reluctant to come forward with new initiatives? Why have the Government agreed with the other G7 members to postpone further urgent discussions on Bosnia in the United Nations Security Council?
If the matter is to be solved by diplomacy, it will be through the United Nations, and we plead with and urge the Government to raise the matter once again in the Security Council. It is truly through diplomacy, pressure and tighter economic sanctions that the Serbs will be made to sign the peace agreement, so that we have the possibility of a lasting peace in that country. There is a feeling of a lack of urgency on behalf of the Government.

Mr. Rifkind: First, I thank the hon. Gentleman for his tribute to the work being carried out by our forces in Bosnia. It is helpful for their contribution to be seen to be recognised by the House.
The hon. Gentleman can be assured that my right hon. Friend the Minister for Overseas Development will monitor carefully whether extra aid is required to prevent starvation in Bosnia. Fortunately, the effort that has been carried out so far has, as he rightly says, ensured that the predictions of mass starvation have not come about during the winter months, and we wish to ensure that that situation continues.
The hon. Gentleman asked whether middle east aircraft had been seen landing in Bosnia. I cannot confinn the details of that, but we have reason to believe that some arms have been supplied to the Bosnian Muslim forces and to other factions taking part in the war.
The hon. Gentleman asked about the number of troops that might be required if there was to be military intervention in Bosnia. The answer to that would depend on whether such intervention followed the signing of a peace treaty by all three parties and was in the form of a United Nations peacekeeping role, or whether it was to impose a peace settlement that had not been agreed by the parties.
Even if there was agreement to a ceasefire, some 50,000 to 60,000 United Nations forces might be required, and, if there was no peace treaty or ceasefire, clearly the number that would have to be contemplated would be much larger, and, in a situation of continuing warfare in Bosnia, could run into hundreds of thousands.
Her Majesty's Government entirely share the desire to get through as quickly as possible the new United Nations resolution increasing the sanctions proposals. The hon. Gentleman will be aware that that requires unanimity in the Security Council and that Russia has, for reasons that are well known to the hon. Gentleman, asked for some delay in the consideration of that resolution.
That will not necessarily lead to any delay in its implementation. The current resolution before the Security Council allows a 15-day period after it has been passed before it comes into effect. It is possible that, even if there is a delay in passing the resolution, there will not then be a need for that 15-day period to elapse before the new resolution comes into effect. Therefore, the Russians' request may not have the consequences that the hon. Gentleman fears.

Sir Nicholas Bonsor: I very much welcome the statement of my right hon. and learned Friend, which sets out the difficulties of intervening in the tragic affairs in Bosnia. I particularly welcome the caution that he shows about the proposal that we should indulge in air strikes against Serbian artillery positions. We have many troops sitting under the barrels of Serbian artillery, and I have no doubt that they would be the subject of retaliation the moment that any air attacks were launched. Therefore, will my right hon. and learned Friend give the House an absolute assurance that, should circumstances change and an attack on Serbian artillery positions be contemplated, British troops currently giving humanitarian aid in Bosnia would be withdrawn before such attacks took place?

Mr. Rifkind: We attach the greatest importance to the physical safety and security of the British forces in Bosnia. I agree with my hon. Friend that it is difficult, if not impossible, to see how one could contemplate continuing a humanitarian operation in the name of the United Nations if the United Nations was simultaneously authorising military strikes on the combatants on the ground in the same areas where the United Nations relief operations were taking place. It is difficult, if not impossible, to see how those two objectives could be reconciled.

Mr. Menzies Campbell: Although the right hon. and learned Gentleman and I disagree about a number of elements of this matter, I believe him to be fundamentally right in resisting calls for the relaxation of the arms embargo, from whatever quarters those calls may come. However, may I remind him that Srebrenica is territory assigned to the Bosnian Muslims. What military assessment has been made of the prospects of Srebrenica being captured by the Bosnian Serbs who are presently laying seige to it? What political assessment has been made of the consequences for the Vance-Owen plan if the Bosnian Serbs were to succeed in capturing Srebrenica?

Mr. Rifkind: I thank the hon. and learned Gentleman for his earlier remarks. On the latter part of his question, clearly, any conflict in Bosnia, whether in Srebrenica or elsewhere, goes against the spirit and objectives of the


Vance-Owen plan. We very much hope to achieve a ceasefire by all the parties and an end to the conflict in Srebrenica and elsewhere in order to promote the circumstances to enable a more lasting peace to be achieved throughout Bosnia.
Srebrenica is the most immediate issue, on which our attention is focused—a few weeks ago, it was focused on Sarajevo, and earlier on Dubrovnik. Clearly, a number of localities dominate the headlines at any given time. But unless we can achieve peace throughout Bosnia, local agreements in specific parts of Bosnia will be unlikely to contribute to the overall objectives.

Mr. David Howell: Does my right hon. and learned Friend accept that he and my right hon. Friend the Foreign Secretary are right to warn against the dangers of making policy for the medium term in the emotional heat of the moment? However, does he accept that the present position is untenable and there is a real danger, which we must anticipate, of being dragged into a far wider and more difficult conflict unless some check is imposed on the Serbian-driven expansionism and aggression, which we are presently witnessing, and which is leading to all the blood and slaughter? While I recognise my right hon. and learned Friend's caution and the difficulties faced by all policy makers in such circumstances, may I ask him at least to assure us that we are actively considering such matters with our United States and United Nations allies?

Mr. Rifkind: I very much agree with what my right hon. Friend has said. The thinking behind the tightening of economic sanctions is to bring home to the Serbians the heavy price they pay for their continued activity. It is important not to underestimate the effect that sanctions have already had. Industrial production has come down by more than 40 per cent. since sanctions were imposed, more than 65 per cent. of the work force are unemployed or temporarily laid off, and Serbian figures suggest that the first eight months of sanctions cost Serbia more than $10 billion in lost revenue. Therefore, the sanctions are clearly having a powerful impact on the Serbian economy. We must hope that that will help bring those responsible for that country's policy to their senses.

Mr. Max Madden: What is to be done about men of fighting age in Srebrenica? Will they be given arms so they can defend themselves? Will they be evacuated under United Nations military protection, or will they be left to be slaughtered by the Serbian forces?

Mr. Rifkind: The UN forces in the area are the best judges of how they can contribute to the humanitarian objectives in accordance with the mandate that has been laid down. In recent months, UN forces throughout Bosnia have carried out activities which have been slightly broader than those originally envisaged. We originally expected them to be carrying out obligations in relation to the supply of food and aid. In recent weeks, they have been carrying out additional activities, involving giving transport to refugees wishing to go from war zones to areas of relative peace. It is important to allow the UN that discretion as long as it is consistent with the humanitarian framework—the mandate under which it currently operates.

Mrs. Edwina Currie:: The Secretary of State will be aware that a number of my constituents are serving in Bosnia at the moment. Does he accept that those of us who are reluctant to send thousands more young men and women to that fighting area are acting not from lack of moral courage or lack of moral fibre but from sincere and heartfelt worries about what would happen to our constituents and their families—people to whom we as elected Members have to respond every weekend—should we take any decisions that would embroil them in that dreadful conflict?

Mr. Rifkind: Important moral dimensions have to be taken into account when our service men and service women are asked to go into a war zone. First, we must consider whether it is right and proper for them to be there, and secondly we must consider whether they have a reasonable prospect of carrying out the role for which they have been sent. If one comes, however reluctantly, to the judgment that there is not a military solution to the problem we face, it will not do any service either to the victims of aggression or to the wider moral and ethical issues to take action which one believes is foredoomed to failure.

Rev. Martin Smyth: I welcome the general thrust of the statement. I represent people who have already suffered because of the conflict in Bosnia, and I join the Minister in paying tribute to our security forces. We in Northern Ireland have experience of their professionalism, and we have no doubt that they are doing the same sort of job in Bosnia.
I should like to press the Minister on the concept of sanctions. When have sanctions really been effective? Time and again, the House has been assured that they do not work. Does the Secretary of State accept that it is easy to give moral lectures on political courage, as the Prime Minister did recently in Northern Ireland, but that they do not rest well on the shoulders of someone who in her turn yielded moral courage and, at the behest of terrorists, moved towards signing an agreement that yielded to them? The Government should not follow the line proposed by Baroness Thatcher.

Mr. Rifkind: I agree with the hon. Gentleman that the history of sanctions does not give one great confidence that by themselves they will achieve the desired objective; but that is not to say that they cannot be part of a wider strategy and cannot make an important contribution towards maintaining the maximum pressure on those who are responsible for aggression. Sanctions have a role to play, but only as part of a wider strategy.

Sir Geoffrey Johnson Smith(Wealdon): I warmly welcome my right hon. and learned Friend's statement, and especially his cool, rational analysis, and the recognition of his moral obligation to ensure that our troops are not involved in a dispute that is not of their making. I also welcome the recognition of the fact that it is not in the interests of the United Kingdom to plunge British troops into armed intervention in a national civil war. What assessment has been made by NATO high command of the time it would take to involve NATO itself in peacekeeping, should there be an agreement between the three conflicting parties in the former Yugoslavia?

Mr. Rifkind: In part, the answer to my hon. Friend's question clearly depends on how much contingency work


has been done in advance of any such ceasefire. It would also depend on the judgment about whether any agreement signed by the three parties could be assumed to be a reliable treaty which they honourably intended to carry out and were able to deliver. We should have to be cautious in seeking to identify whether any treaty that might be signed at some future time was qualitatively different from some of the previous agreements that were signed and then dishonoured almost within minutes of their making.
Such decisions are difficult and delicate. We hope that the Vance-Owen agreement will be signed by the Bosnian Serbs as well as by the other two parties, and that, in signing it, they intend to deliver the commitments, into which they have entered.

Mr. D. N. Campbell-Savours: Since last August, a number of Opposition Members have positively supported the use of military intervention, in the form of air strikes, against Serbian positions because we believe that it is impossible to negotiate with fascism. We believe that fascism sets its objectives and ignores its victims. Fascism is what we have in Serbia. Is not it about time that this country, the European Community, the United Nations and NATO realised that this cancer growing at the very heart of Europe has got to be stopped now before it spreads even further?

Mr. Rifkind: Without commenting on the hon. Gentleman's description of the Serbian or Yugoslav authorities as fascists, I put it to him that there is at least one fundamental flaw in his approach. I understand that he wishes to see military strikes but, along with every hon. Member, does not wish to see the deployment of ground forces. It is difficult to understand that distinction if military might is to be used to achieve the objectives the hon. Gentleman seeks. The hon. Gentleman must consider, if he believes in the use of military power, on what basis he seeks to distinguish between air strikes and the use of all forces which might be available to the international community.

Mr. Winston Churchill: My right hon. and learned Friend is more aware than most that the Serbs started this conflict with at least 10 times as much military hardware and ammunition supplies as the Muslims. I therefore ask my right hon. and learned Friend the question that I asked our right hon. Friend the Foreign Secretary last November: is it not unprecedented for the United Nations to impose an arms embargo on the victim of military aggression—in this case, the Bosnian Muslims?
Do not the Government see that the inevitable consequence of the present policy is that ethnic cleansing and genocide will continue, because nothing whatsoever is being done by the international community to stop it? Has not the time come to get the Russians on side in this matter at the United Nations, and to threaten the Serbs with selective air strikes in the event that they do not sign up for a ceasefire and the Vance-Owen plan?

Mr. Rifkind: My hon. Friend is correct in that, at the beginning of the conflict, the Bosnian Serbs had a preponderance of the military equipment that they inherited from the old Yugoslav armed forces. However, he should take into account the fact that this conflict is not simply an act of aggression by one faction against another. It is the consequence of the collapse of Yugoslavia and the

development of a conflict within Bosnia among three sections of the community—all of which are Bosnian—which has many of the characteristics of a civil war.
Although I entirely agree with my hon. Friend about the importance of keeping Russian support for the actions of the United Nations—it is necessary if there is to be agreement within the Security Council—I do not believe that that support would be forthcoming for the military strikes that he has simultaneously proposed. He has to choose one or the other: he cannot expect a policy of military intervention to receive Russian support in the Security Council.

Mr. Tony Banks: Before the United Nations has to go into the ranks of the Conservative party to keep the warring sides apart, will the Secretary of State agree that Margaret Thatcher at least articulated the deep anger and frustration that many people in this country feel about the inability of European Community powers to do anything about the situation in Bosnia? Is it not time to consider giving an ultimatum to the Serbian Government that, unless they are able to bring the Bosnian Serbs to account, there will be strikes against military targets inside Serbia in order to cut off the supply of arms from Serbia to the Bosnian Serbs?

Mr. Rifkind: The hon. Gentleman's suggestion, which is similiar to that made by my right hon. and noble Friend Lady Thatcher, would fundamentally change the role of the United Nations. The United Nations would then become, consciously and deliberately, a combatant in that war. Although I have no doubt that the hon. Gentleman puts forward that view with knowledge of the implications, he must also realise that that would not only terminate the humanitarian efforts of the United Nations, including those of the United Kingdom, but would fundamentally change the whole nature of international involvement in that war, without any certainty or likelihood that it would bring an earlier end to the conflict in question.

Mr. Barry Porter: I am grateful for the compliments paid by my right hon. and learned Friend to the Cheshire battalion group in Bosnia. I agree with the general thrust of his statement, but does he not think that there is a ghastly parallel between the feebleness of the United Nations' stance today and that of the League of Nations, some 60 years ago, against expansionism? I do not know the answer, but it is there and we ought to start to look for it. We cannot find it by military intervention at the moment, but we must start to look beyond sanctions and find another method; otherwise, we shall go through exactly what we went through 60 years ago.

Mr. Rifkind: I do not entirely agree with my hon. Friend's comparison. When there is a conflict, whether it be the conflict in Bosnia or the Spanish civil war in the 1930s, for example, it is incredibly difficult for the international community to make a meaningful contribution towards ending it. The difference since the second world war is that, when a sovereign country is invaded by a foreign power, the United Nations, as we saw in the Gulf, is remarkably more successful than the League of Nations in the previous period. My hon. Friend has to take that fact into account when making historical comparisons.

Mr. Ieuan Wyn Jones (Ynys Môn): Although many people may not agree with the solutions proposed by


Baroness Thatcher, I believe that she struck a chord when she expressed her sentiments about the horror of ethnic cleansing and the systematic rape and driving of women and children from their homes. The Secretary of State has been reluctant to contemplate limited air strikes against Bosnian Serbs in Serbia, but he has been careful not to rule them out completely. In what circumstances can he foresee limited air strikes being used?

Mr. Rifkind: I have already said that the use of air power in certain circumstances can be relevant, and that we are using it at the moment to enforce the no-fly zone. As to the hon. Gentleman's question whether air power could be used in some other way, that is not in itself an ethical question. It is a question whether, in the circumstances proposed, it would produce the benefit that has been identified by those who advocate it.
Our judgment is that that would not be the case, having regard to the proposals currently being made. It would not only destroy the humanitarian effort of the United Nations but would transform the United Nation's role. That, it seems to us, would not be in accordance with the objectives we seek.

Mr. Patrick Cormack: Does my right hon. and learned Friend accept that it is just over a year since Her Majesty's Government, in common with many other Governments, recognised Bosnia as an independent sovereign state; that during that year 2 million or more people have been displaced; that well over 100,000 people have been killed; that the killing still goes on; and that there is continued evidence of Serbian involvement, from Serbia itself, in these atrocities? Does my right hon. and learned Friend also accept that, today, the Bosnian Government are ethnically mixed, and that, whatever their shortcomings, they are far more democratic than the Government of that other nation, Kuwait, to whose aid we rightly went?

Mr. Rifkind: Although my hon. Friend is correct when he says that Bosnia is an independent state which has been recognised by the international community, the fact is that those who are involved in the combat within Bosnia are themselves Bosnian citizens—Bosnian Croats, Bosnian Serbs and Bosnian Muslims—and that they are all involved in this carnage against one another. Until my hon. Friend comes to terms with that fact, it is not possible to think of this as simply an international war of the kind that he has occasionally sought to portray.

Mr. Robert N. Wareing: In the discussions that I had with Dr. Karadzic at the end of last year, he claimed that he had made an offer to the United Nations to provide it with the facility to have monitors at every command post of the Bosnian Serb army and at every Bosnian Serb airfield. Why has that offer not been taken up? That would be less precarious and risky for our 2,800 troops who are there now than their present position. That facility could have determined precisely who pulled the trigger first and fired shells at Srebrenica. Why do we not take up Dr. Karadzic's offer and put United Nations monitors in place?

Mr. Rifkind: As I recollect it, Dr. Karadzic made that proposal as a way of avoiding an enforcement resolution for the no-fly zone proposals. Since then, for the first time,

Dr. Karadzic's supporters—the Bosnian Serbs—have introduced Bosnian Serb combat aircraft over the Bosnian skies. That is why it was necessary for the Security Council to pass the enforcement resolution, which is now being implemented by NATO on the United Nations' behalf.

Mr. Harold Elletson: Does my right hon. and learned Friend agree that the quickest available short cut to a general Balkan war and an escalation of the conflict far beyond the borders of Yugoslavia would be to bomb Serbian positions? Will he therefore treat the recent comments of Baroness Thatcher with the contempt that they deserve?

Mr. Rifkind: It is certainly important that we do all within our power to prevent the internationalisation of the crisis in Bosnia. That must be an objective in the interests of the whole world. I believe that bombing Serbia would exacerbate the situation in a way that would be unlikely to bring peace to that part of the world any earlier.

Mr. Frank Field: Does the Secretary of State realise how widespread the disappointment will be throughout the country that he has again used this opportunity to nail his colours so firmly to the fence? How many more millions of people must be driven from their homes and tens of thousands of people killed before the Government propose a policy commensurate with the genocide that we are witnessing?

Mr. Rifkind: I listened carefully to the hon. Gentleman, and I was waiting to hear which policy he would propose. He knows that, sadly, there are many such wars going on around the world at the present time—in Angola, in Cambodia and in Azerbaijan—as well as in Bosnia.

Mr. Field: This is in Europe.

Mr. Rifkind: I am not aware of any ethical distinction between a war in Bosnia and a war in Angola or Cambodia. If the hon. Gentleman is appealing to the Government on moral grounds, it is a curious moral distinction that is prepared to tolerate conflict in other parts of the world but not in Bosnia. Unless he has specific proposals that have not already been considered, I ask him to realise that the options that are being advanced by some of his hon. Friends are not, in our judgment, likely to produce the results that he and Conservative Members would like to see.

Mr. Peter Fry: Does my right hon. and learned Friend accept that there will be widespread support for taking care not to risk the lives of British service men? Does he further accept that, throughout the country and across party divides, there is growing concern about the dilemma of where we are going and how we shall deal with this appalling problem? On the one hand we appear to be refusing to allow Bosnian Muslims to be adequately armed, but on the other hand the United Nations, by not using force, is denying those Muslims the right to defence. While their territory is continually being reduced, more and more of them are being slaughtered.
Is there no point at which the Government and the United Nations will say that enough is enough? We must say that or get out completely, because the ultimate result of the war will be many more thousands killed. The British people understand the Government's point of view but are a little ashamed that we have not been able to do enough to save the lives of many innocent people.

Mr. Rifkind: We would all be anxious to do more if proposals were identified that would help to achieve the aims that my hon. Friend and I, and all other hon. Members, share. My hon. Friend says that we should tell the Bosnian Serbs, "Enough is enough," or that we should pull out from Bosnia entirely. In practice, that would mean pulling out the 2,500 British forces who have taken thousands of tonnes of aid to rescue many Bosnians, from all communities, from the starvation that they would have faced over the winter months.
In recent weeks, we have seen how United Nations forces have been helping refugees by taking people to safe places away from the war zone. It may not be the most heroic policy and may not resolve the overall problems in Bosnia, but to say that, because we cannot achieve all we would like, we must resign ourselves to doing nothing, is a counsel of despair, and not one that would commend itself to the House or the country.

Mr. David Winnick: Does the Secretary of State recognise that there has been a shift of opinion, certainly across the country and in the House in recent months? I was among those who argued six or eight months ago against any form of military intervention. However, in view of the continued slaughter of innocent Bosnian civilians, is it not clear that far greater pressure must be placed on the Serbian leadership and military commanders? To a certain extent, one can draw an analogy with the ruler of Baghdad.
Is it not the case that the Serbs continue their aggression, war crimes and atrocities because they know that no force will be used to stop them? Whether Lady Thatcher is right or wrong, are we to be appeasers in the face of some of the worst crimes in Europe since the end of the second world war?

Mr. Rifkind: If the hon. Gentleman wishes to draw parallels with the Iraqi regime of Saddam Hussein and the occupation of Kuwait, he should reflect on the fact that Kuwait and the Iraqi forces in Kuwait were subject to the largest strikes of air power for a sustained period of weeks, if not months, that the world had ever known, but that those strikes did not achieve the desired effect. They did not lead to the withdrawal of a single Iraqi soldier from the Gulf. It was only when a massive international coalition army went in on the ground that we achieved the liberation of Kuwait. Therefore, people who argue for selective air strikes must ponder whether that is likely to achieve the result that they have in mind.

Sir Patrick McNair-Wilson: Although I congratulate my right hon. and learned Friend on his measured response to those who want further military involvement, what evidence does he have that the no-fly zone, fully implemented, will have any effect on ground fighting in the area? Is there not a danger that the escalation of the involvement of NATO and others could encourage those who believe that, if they make enough noise, more support will be given and that we will be drawn in gradually, which could be dangerous in the future?

Mr. Rifkind: The purpose of the no-fly zone is to ensure that the United Nations resolution of some months ago, banning the use of Bosnian aircraft by any of the fighting parties, should be implemented. We had considerable doubts and reservations about the wisdom or necessity of

a no-fly zone enforcement resolution but those concerns became irrelevant when some weeks ago the Bosnian Serbs for the first time decided to reintroduce combat aircraft into Bosnia. Once they had done that, it became inevitable and necessary for the United Nations to enforce its own resolution. That is what the NATO operation, at the behest of the United Nations, is doing at the moment.

Mr. Mike Gapes: What representations are being made to the Russian Government at the moment to ensure that they change their attitude to the enforcement of sanctions in the next two weeks? What action is being taken within the European Community to stop the flouting of sanctions via the Danube, which has been going on for months? Why has it taken so long for air exclusion zones to be imposed when they were being talked about several months ago? Why is it only now that people are talking about truly enforcing sanctions, when we knew last summer that they were being broken?

Mr. Rifkind: The increase in sanctions currently being considered by the Security Council includes the stricter monitoring of the Danube. My right hon. Friend the Foreign and Commonwealth Secretary is of course making strong representations to his Russian colleagues. I remind the hon. Gentleman what I told the hon. Member for South Shields (Dr. Clark): the current resolution allows for a 15-day period before any new Security Council sanction enforcement measures would apply but, if there is any delay because of the Russians, it may not be necessary to have that 15-day period after the passing of the resolution. Therefore, there may be no time lost as a result of the current Russian position.

Mr. Derek Conway: I hope that my right hon. and learned Friend will acknowledge that none the less there is widespread anger in the community when we watch the reports that most of us saw yesterday. Does he accept, however, that he stands at the Dispatch Box not to express emotion and anger but to exercise his realistic judgment, and that the reasoned stand that he has taken today has the full support of the House? Will he please explain to the House the effect of deploying air power alone, as opposed to the use of air power with massive ground troop reinforcement, which some have urged—some of us believe unrealistically—on the nation?

Mr. Rifkind: I thank my hon. Friend for his remarks. Of course, there can be circumstances in which air power by itself can achieve a desired result—for instance, if there is a particular target that can be identified, taken out from the air and eliminated. But in general, the use of air power as we have seen it exercised over the years has been to soften up a target that can then de dealt with by forces on the ground.
I know that my hon. Friend shares my view that, in the context of the terrain with which the Royal Air Force and other air forces would have to deal in Bosnia, it is difficult to believe that targets, including mobile artillery in heavily forested country, could easily be picked out and eliminated by the selective use of air power. At the end of the day, unless ground forces are also used, it is difficult to believe that such an operation could have more than a limited effect.

Mr. John Gunnell: Does the Secretary of State accept that considerable unhappiness has been expressed on both sides of the House about


policies which will in effect give comfort to the Serbs when they listen to, or hear about, our discussion? We have ruled out certain action, and that decision has had support, but we have been given no suggestion of extra action. It is clear that, for the very reasons with which the Secretary of State started his statement, our present policies are ineffective. He referred to yesterday's shelling and——

Madam Speaker: Order. That is not a question.

Mr. Gunnell: I am coming to the question, Madam Speaker.
As extra pressure has been mentioned, what extra pressure can in practice be brought to bear on the Serbs? It is imperative that, when they are redoubling their efforts to take more land, we adopt practical measures to curb them—[Interruption.] I should like the Secretary of State to say——

Madam Speaker: Order. I call the Secretary of State.

Mr. Rifkind: As the hon. Gentleman will be aware, in the past week the United Nations has for the first time taken effective measures to prevent the use of air space by Bosnian Serbian combat aircraft. In the Security Council, we are currently discussing a substantial tightening of the economic sanctions that have already devastated the Serbian economy. No doubt other measures, which we hope will contribute to the result that we all wish to see achieved, will be considered.

Several hon. Members: rose——

Madam Speaker: We are now moving to the second statement. I had hoped to call more hon. Members to question the Secretary of State, and would have been able to do so if Members had put direct questions and not made such long statements.

Competition

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton): With permission, I should like to make a statement about strengthening the law to curb anti-competitive practices in the marketplace.
Last November my right hon. Friend the President of the Board of Trade announced to the House the publication of a Green Paper on "Abuse of Market Power" which outlined three possible options for strengthening the law. Those options were to strengthen the existing legislation, to replace it with a prohibition, or to run the two systems in parallel.
We received 143 responses to the Green Paper. Copies of a summary of them have been placed in the Vote Office. There was no consensus amongst those who responded on which of the options represented the best way forward. Each of the options received roughly equal support. This contrasts with the overwhelming support for introducing a prohibition on restrictive trade practices. I can assure the House that the Government remain committed to introducing such a prohibition when legislative time permits.
Having carefully considered the arguments advanced for and against each of the options, the Government have decided that the best choice is to strengthen the existing system. With this strengthened regime we can retain the current wide scope and flexibility of powers without increasing the regulatory burden on firms.
It is proposed to strengthen the current legislation in four ways: stronger powers of investigation; additional scope for enforceable undertakings; provision of interim orders to suspend anti-competitive practices; and some coverage of property rights. Stronger investigative powers for the Director General of Fair Trading should enable him to establish more quickly whether there should be a full-scale investigation.
The director general currently has discretion to accept enforceable undertakings in lieu of a Competition Act reference to the Monopolies and Mergers Commission. It is proposed to extend this ability to enable him to accept such undertakings, subject to suitable safeguards, before his formal investigation under the Competition Act, and in lieu of a monopoly reference under the Fair Trading Act 1973. Breaches of these undertakings would be enforceable in the courts. This proposal received considerable support from respondents.
The Green Paper suggested that companies might be made liable for penalties and damages from the point at which an MMC reference was made if they continued with a practice that was subsequently found to be against the public interest. A number of respondents argued that would be unjust and that it might lead a company to abandon a practice that was later found not to be against the public interest. That argument is accepted. But there can be cases in which immediate action is necessary. We therefore intend to take up the suggestion made by some respondents that we should be able to make interim orders under the Competition Act. These would prohibit specified activities by a firm if there was good reason to believe that a competitor, customer or supplier ran the risk of suffering serious damage during the period of the MMC's investigation.
The Green Paper considered the very limited scope of both the Fair Trading Act and the Competition Act to deal with competition problems concerning property rights. Fundamental change is not proposed in this area, but it is important to be able to deal with some limited situations in which specific property rights—for example, rights of access—are exercised in a way that damages competition. We shall hold further discussions with interested parties to resolve how best to deal with those problems.
As regards the other options in the Green Paper, the Government are not convinced that a compelling case for repealing the current legislation and replacing it with a prohibition on abuse of market power has been made. Nor are we convinced that such a prohibition should be added on top of the existing monopoly controls.
It is clear from the consultation that a prohibition would increase the regulatory burden on companies and introduce uncertainty for business. Despite experience of EC law, the identificatiiton of abuses of market power in many cases remains a matter of fine judgment. It can be very difficult to assess in advance what will be regarded as anti-competitive and what as acceptable business behaviour. That inherent uncertainty, coupled with the possibility of fines and private actions, could run the risk of inhibiting rather than promoting competition. In contrast, restrictive agreements can be more readily defined and prohibited, as set out in the 1989 White Paper.
When my right hon. Friend the President of the Board of Trade introduced the Green Paper to the House last November, a number of hon. Members raised particular areas of concern, such as relations between the high street banks and business customers. In addition, a number of the Green Paper responses that supported a prohibition implied that this support was conditional on the prohibition being able to deal with alleged unfair practices in their particular markets. One of the tests we applied when considering the various options was the extent to which they would be able to meet those concerns. The conclusion is that a prohibition would bite on fewer market situations than our present legislation does. That is especially true in markets in which there is more than one major player.
The changes I have outlined today will enable us to build on the strengths of the existing legislation. commend them to the House as they will provide the
benefits of vigorous competition without stifling wealth creation. It is intended to include the changes in legislation to introduce the prohibition on restrictive trade practices.

Mr. Derek Fatchett: Does the Minister understand that consumers will be disappointed that the Government have accepted the most timid of the three options set out in the Green Paper? Can he explain, for instance, why the Government have rejected the advice of the Consumers Association, which favoured clear prohibitions arid substantial penalties for breaching them, and full rights for third-party redress?
Why have the Government failed to deal with the shortcomings in the existing legislation, which the President of the Board of Trade himself identified in his November statement? Why, for example, are there no penalties for past misconduct—a weakness which the President of the Board of Trade referred to in that statement?
In what ways will the Minister's statement help small businesses that complain about the abuse of market power

by the high street banks? Is it not true that not a single small business will be helped by the Minister's statement today? Is it not the case that, after five months, we have again had words from the Minister but no action to help small businesses?
Would the Minister's statement in any way have changed the refusal by the President of the Board of Trade to refer to the Monopolies and Mergers Commission the hostile bid by Airtours for Owners Abroad? Will the Government be under any obligation after today's statement to accept the advice of the Office of Fair Trading? Why give additional powers of investigation when there is no need for the Government to accept the recommendations of the Office of Fair Trading or the Director General of Fair Trading?
Not once in his statement did the Minister refer to the interests or wishes of consumers. In adopting the option that has been announced, the Government can be accused of putting vested interests before the interests of consumers. This Government do not represent consumers' interests.

Mr. Hamilton: As a representative of a party that cannot even change its constitution, clause 4 of which advocates statutory monopolies throughout the country, the hon. Gentleman makes an unconvincing proponent of competition.
Let me answer the questions that the hon. Gentleman has put to me. In deciding which of the three options to adopt—principally, of course, in consumers' interests—we had to consider what would ultimately be likely to benefit consumers. We concluded that to introduce an unnecessarily complex, burdensome and bureaucratic system which, in certain circumstances, might stifle rather than enhance competition would not ultimately be to the benefit of consumers.
We decided instead to build upon the strength of the existing system—which, in my opinion, has been very effective over the years in defending the interests of consumers—and to plug certain gaps and close certain loopholes in that system. That is precisely what we have done: we have opted for certainty and flexibility; for the least burdensome option; and to build upon a system that is regarded as largely effective.
The Consumers Association principally wanted to ensure that we introduced a system that was certain and simple to understand. The option that the association selected—option 3—would have been the most complex and confusing of the various options. That is why we decided against it.
The hon. Gentleman asked me about the practices, which have been widely criticised, adopted by the banks. We are dealing here with the abuse of market power—in particular, in circumstances where one company has a large share of the market and abuses the power that that large share gives it. That is not the case with banks, which are already covered by the existing competition legislation.
Under the Fair Trading Act, a complex monopoly occurs where companies together act in a way that is contrary to the interests of consumers or against the public interest, in circumstances where those companies together have more than 25 per cent. of the market. It is perfectly open to anyone aggrieved by the practice adopted by the banks at present to make a complaint to the Office of Fair


Trading, which can consider the matter. If the complaint appears to have substance, the Monopolies and Mergers Commission can be brought into play.
The hon. Gentleman asked about the Airtours bid. I cannot in any way speculate as to what the outcome of any application might have been if the law had been different. What I can say is that the President of the Board of Trade decided in the circumstances of the case—which was widely regarded as being a matter for fine judgment—that there was no case for investigation. The curious outcome—at which the hon. Gentleman may be rather surprised—is that the market, having been allowed to work in those circumstances, has reduced the level of uncertainty for the company that did not wish to be bid for. Hence the most speedy outcome has been determined as a consequence of the President's decision.

Mr. Dennis Skinner:: Come on.

Mr. Hamilton: The hon. Member for Bolsover (Mr. Skinner) is complaining about the fact that I am treating the comments of the hon. Member for Leeds, Central (Mr. Fatchett) seriously. I know that the hon. Member for Bolsover does not treat his Opposition Front-Bench colleagues seriously, but I, at least, am paying them that compliment.
The official Opposition spokesman, the hon. Member for Leeds, Central, asked whether we should have changed the legislation to make it a requirement that Ministers should accept the advice of the Director General of Fair Trading. There would be no point in giving Ministers advice if they were obliged to accept it as it would not then be advice. The hon. Gentleman is asking us to remove his opportunity to hold Ministers accountable for the decisions of competition authorities. I do not know whether everyone would agree with that.

Mr. Rupert Allason: While I welcome the extension of investigatory powers under fair trading and competition legislation, does my hon. Friend the Minister accept that what he has announced this afternoon will be no consolation to the customers of high street banks who believe that they have been bilked by banks over the past two years? Does he also accept that his announcement will be no consolation to water ratepayers, particularly those in the south-west who will be paying increased charges of more than 16 per cent. this year? Frankly, water ratepayers have no confidence in the regulatory authorities or in Ofwat. Will my hon. Friend take this opportunity to give them some words of comfort?

Mr. Hamilton: All I can say to my hon. Friend is what I said to the hon. Member for Leeds, Central a moment ago. With regard to the banks, our current competition legislation is apt to cover the kinds of circumstances about which my hon. Friend complains. If the Director General of Fair Trading formed the view that certain practices were contrary to the public interest, he could make a recommendation that the matter should be investigated by the MMC. So far, he has chosen not to do that.
As my hon. Friend will be aware, the water industry, like all the privatised utilities, is subject to a significant degree of regulation in the interests of consumers. The Director General of Water Services has power to consider all matters that might adversely affect the interests of

consumers and to take the necessary action accordingly. Once again, it is not for me to second-guess the decisions of the Director General of Water Services. However, it is open to anyone who is aggrieved to take a case to the director general and make the argument for it.

Mr. Alex Carlile: The elegant but labyrinthine language of the Minister's statement has left many of us and some consumer groups puzzled. Why will the weakest of the three options stop some of the inexcusable bullying by large companies of smaller emerging companies? Why have the Government not taken the second or third option in the Green Paper—for a prohibition regime of a type which works extremely well in numerous other countries and which is the norm in the rest of the European Community?

Mr. Hamilton: I am afraid that the hon. and learned Gentleman's hearing aid must be defective. I have already answered that question twice. We have chosen the option that is likely to be the least burdensome and least costly and to build upon the effectiveness of the existing system.

Mr. David Shaw: Can my hon. Friend assure me that the way in which his proposals will impact on small and medium-sized businesses will not increase bureaucracy, paperwork and regulation and that small and medium-sized businesses have something to look forward to under the proposals?

Mr. Hamilton: I think that I can confirm what my hon. Friend has asked. As Minister responsible for the deregulation initiative, I had very much in mind the impact of costs upon businesses. We must consider the proportionality of what we do in the House by way of imposing legislative burdens. For very small improvements in consumer benefits, we might impose significant costs on companies which, ultimately, have to be borne by consumers as well.

Mr. Bill Etherington: As the Minister has taken a fairly soft option, and as we are all aware that where there is no competition, such as in the nationalised industries which have now become private monopolies, we rely on the regulator, which, in my view, is little better than a panacea to keep the public happy, what is the position if we have a regulator like Professor Littlechild, who has brought the art of slothfulness almost to the point of atrophy and has led to the destruction of the coal industry? Will the legislation do anything to prevent such a dreadful recurrence, as we have seen in this incident?

Mr. Hamilton: The hon. Gentleman has an impressive command of polysyllables but a rather less sure grasp of the legislation which governs privatised utilities. I doubt whether the privatised utilities would share his opinion that the director generals who are responsible for their operations are weak or ineffective. I am fairly certain that British Gas does not take that view.

Mrs. Angela Browning: Does my hon. Friend agree that small businesses, especially sole traders, often feel that they are penalised by larger companies? I appreciate and welcome my hon. Friend's statement today. Will he ensure that large companies which are found guilty under the new proposals are required by statute to publish in their annual reports where they have been found wanting?

Mr. Hamilton: That is an interesting suggestion which I have not heard from anyone else. As the Minister responsible for company law, I shall give consideration to it.

Mr. Skinner: The Minister must think that we have dropped off a Christmas tree if he thinks that we believe all the mumbo-jumbo which he has trotted out today, especially when we consider fair trading against the background of petrol stations rigging their prices and banks ripping off customers. Prices are rigged in the Common Market, lawyers fix their fees to extortionate heights and nuclear power is subsidised by £.1.3 billion to the detriment of coal—and the Minister asks us to believe that he is talking about fair trading. Take it back and chuck it in the dustbin.

Mr. Hamilton: I do not know which specific ornament the hon. Gentleman would be on the Christmas tree. [Interruption.] My hon. Friend the Member for Amber Valley (Mr. Oppenheim) suggests that the hon. Gentleman would be the fairy at the top. I am sure that the hon. Gentleman's weighty opinion in this area, as in all others, will be treated by the House with the degree of importance which it deserves.

Mr. John Whittingdale: Does my hon. Friend accept that the fact that little evidence has been produced of a significant abuse of market power by private sector companies which are not already subject to the oversight of a specific regulator suggests that the present system is generally working well? Is there not a risk that a more significant amendment to the law, such as that involved in options 2 and 3, would add to the bureaucratic burden on firms to little benefit?

Mr. Hamilton: I entirely agree with my hon. Friend. Many of the complaints of small businesses in particular relate more to inequality of bargaining power rather than to an abuse of a dominant position. That is a much more difficult question to deal with, and it is not one which was addressed by the Green Paper.

Mr. Alan Williams: Can the Minister tell us whether the policy announced today will have any effect on the beam in the Government's eye? I am sure that he is aware that many firms absolutely depend on contracts from the Ministry of Defence. Does he realise that such contracts are placed through a division of the Property Services Agency, which is forcing firms to forgo their right to payment within 30 days and requiring them to accept that they will be paid only when the Property Services Agency has been paid by the Ministry of Defence? That is an abuse of market power which conflicts with what the Chancellor promised in the 1922 Budget and in which Ministers are conspiring.

Mr. Hamilton: It would have been less of a problem if there had been a Labour Government because there would have been fewer defence contracts for small suppliers. A Labour Government would have made swingeing reductions in defence expenditure, despite the crocodile tears which Labour Members now shed at the outcome of "Options for Change".
With regard to the specific question about late payment, the Government are committed to paying their bills in due time, and that goes for their main contractors

as well. We hope that main contractors will impose the same terms on sub-contractors because we take seriously the question of late payment of debt.
A number of other measures have been proposed recently. As the right hon. Member for Swansea, West (Mr. Williams) knows, we have a consultation paper outstanding on whether we should have some sort of statement or audit of the payment practices of companies published in annual reports and accounts. I hope that the right hon. Gentleman will give us the benefit of his views on that matter.

Mr. Anthony Steen: Will my hon. Friend confirm that the private monopolies that have come out of the public utilities will be subject to the terms of the statement? Is he aware that the charges of South West Water amount now to an additional 18 per cent.? That is the result of the National Rivers Authority—the regulatory authority—demanding higher and higher standards faster and faster. I found my hon. Friend's statement helpful, but does he agree that the private monopoly—in this instance, South West Water—is abusing its power? It has no choice, but it is costing Devon and Cornwall water charge payers an arm and a leg.

Mr. Hamilton: The principal reason for water charges having to rise by more than the rate of inflation is that the Labour Government cut substantially water authorities' capital programmes. I note that my hon. Friend the Minister for the Environment and Countryside is on the Government Front Bench. I am sure that he would confirm that we are now having to catch up, in effect, because of the Labour Government's failures during the 1970s.
I do not know the details of South West Water's charges. I am sure, however, that my hon. Friend the Minister of State heard what my hon. Friend said.

Rev. Martin Smyth: Will the Minister's statement give any comfort to those in the pharmaceutical industry who have been concerned about the practice of one of the major manufacturers?

Mr. Hamilton: The hon. Gentleman's question is rather cryptic. I am not aware——

Rev. Martin Smyth: I have written to the Minister about the matter.

Mr. Hamilton: I understand. His question takes up the case that he has set out in correspondence with me. The proposals that are set out in the Green Paper are not designed—[Interruption.] As the hon. Gentleman did not identify the case, I was not certain whether he was referring to the one that I now fully recollect.

Mr. Skinner: Has the Minister written to the hon. Member for Belfast, South (Rev. Martin Smyth)?

Mr. Hamilton: I have done more than that: I have discussed the matter with the hon. Member for Belfast, South.
The case which the hon. Gentleman raised with me in correspondence is not apt to be considered in the circumstances that are set out in the Green Paper, which concern the abuse of a dominant position, especially when one producer has a position in the market which enables him to oppress the smaller operators within it.

Mr. Bernard Jenkin: I add my welcome for my hon. Friend's excellent statement. Will he confirm that the option that he has chosen will not cause a rash of third party actions, which would be expensive for industry and commerce, would slow down the decision-making process and would not necessarily add anything to the existing excellent regime for competition?

Mr. Hamilton: I can confirm that. As a lawyer, albeit one who has retired into public life, I am rather surprised by the stance taken by the hon. Member for Leeds, Central (Mr. Fatchett). As I understand it, he believes that there should be a right of private actions. That would lead to a bonanza for lawyers and would impose significant costs on companies. Ultimately it would not be in the interests of consumers.

Mr. Tam Dalyell: As one who went with the Amalgamated Engineering Union and its lawyers before the Monopolies and Mergers Commission as a witness in the case of the Atlas steel foundry, I was impressed by its method of operation. However, in factory situations of a sort that might arise in any constituency, there is a need to be a bit quicker. Events in factories overtake the MMC whatever it wanted to do in the first place.
I asked the Minister a question that arises from paragraph 13 of the Department of Trade and Industry's paper on intellectual property rights, which states:
intellectual property rights were adequately dealt with in existing legislation. 4 of these"—
the respondents—
favoured intellectual property rights being covered by a general prohibition, with three saying that the role of the Copyright Tribunal would then need to be reviewed.
Does the Minister agree with those respondents? Does he think that there should be a review and extension of the work of the crucially important Copyright Tribunal?

Mr. Hamilton: That is a matter for my hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh), the Under-Secretary of State for Trade and Industry. I shall draw my hon. Friend's attention to the hon. Gentleman's question.

Mr. Phillip Oppenheim: Bearing in mind the fact that virtually the only monopolies operating in Britain in recent history were those set up and sanctioned in the public sectors by Labour Governments, that the Labour party has consistently opposed every attempt to introduce competition, ranging from trying to prevent consumers even from having a choice of telephone to proposing any competition on the domestic routes of

British Airways, that nothing is more certain than that the Labour party will support vested interests, as it did recently when we were dealing with the coal industry, does my hon. Friend agree that Opposition Members have a cheek to pose in the Chamber as the champions of consumers?

Mr. Hamilton: Yes, they have, but it comes as no surprise.

Mr. Bob Cryer: Is it not heart-warming to see so many converts on the Tory Benches this afternoon—Tory Members who are now against the privatisation of the water industry, a measure for which they all voted? They are now complaining about the extortionate prices, salaries and dividends that are now being charged, drawn and distributed.
Is it not right that the Minister has taken the soft option, recognising in passing that some regulation is necessary, that capitalism and free markets do not work by themselves and that the Government must intervene—but not too far, as that would expose the nasty, villainous tactics that many big businesses pursue?
Why do the Government have these double standards? There are no soft options for those who are on income support or for those on the lowest of incomes. For those people there are comprehensive regulations and criminal penalties. Why cannot there be the same approach to big businesses? Is the answer that big businesses know very well that, if they make plenty of large donations to the Tory party, they can get away with whatever they want?

Mr. Hamilton: The hon. Gentleman performs a most valuable function by reminding us what the Labour party is really like.

Mr. Barry Porter: To wrap this up, I am delighted that my hon. Friend has opted for certainty. I do not think that I am alone, however, in saying that I am rather uncertain about what that certainty is. I am not sure what the targets are at which he is aiming. It might be helpful if he would explain to me in what sector I should sell shares—if I had any, which I have not—and, if I intended to invest, which I do not, what shares I should buy.

Mr. Hamilton: I have many functions to perform as an Under-Secretary of State at the Department of Trade and Industry. Fortunately, financial services, which used to be my responsibility, have gone to my hon. Friend the Economic Secretary to the Treasury. I shall direct my hon. Friend's question to him. I am sure that his advice would be better than mine, in any event.

Points of Order

Mr. Gerald Kaufman: I wish to raise with you. Madam Speaker, on a point of order, a matter which I submit affects the rights and privileges of the House.
I wrote in October 1992 to the Secretary of State for Social Security about a case that concerned a disabled child in my constituency. The right hon. Gentleman replied to me more than two months later, saying that the case was being dealt with. I wrote to him again in February because, after more than four months, the case had not been dealt with and settled. As he did not reply, I tabled a question for answer on 1 April in which I asked him when he intended to reply to my letter. There was a response from the Minister of State for Social Security and Disabled People. The Minister stated that he understood that I had
already received from the Benefits Agency a reply both to my earlier letter and to my question.
I had not received that reply, but a little later I did receive it. The letter came from a person called Ann Robinson, director of policy and planning. It began extremely ungrammatically by saying
As Chief Executive of the Benefits Agency it is the responsibility of Mr. Michael Bichard to answer questions on relevant operational matters.
The letter continues:
However, as Mr. Bichard is away at the moment: I am replying on his behalf to your recent Parliamentary Question.
A non-Member was writing that she was replying to a question that I had tabled to a Minister and to which the Minister had not replied. I submit, Madam Speaker, that when hon. Members table questions to Ministers, they have a right to expect answers from Ministers. Furthermore, it is not open to someone who is not a Member to purport to reply to a question from a Member by saying:
I am replying … to your recent Parliamentary Question.
Ann Robinson ended her letter:
I hope you find this reply helpful. A copy will appear in the Official Report and a copy will also be placed in the Library.—[Official Report, 1 April 1993; Vol. 222, c. 421.]
Here is a non-Member saying, purporting, claiming, that she can arrange for a reply to be published in the Official Report and for a copy to be placed in the Library when she herself has no right to enter the Library of the House of Commons.
The matter affects the right of every Member of Parliament to table a question to a Minister and to receive a Minister's reply. Also, someone who is not a Member of Parliament must not be permitted to state that she is replying to a parliamentary question or that she is arranging for a reply to appear in the Official Report and to be placed in the Library.
The matter IS for the House. It is a question not of my dispute with a Minister over policy or individual cases, but of whether Members of Parliament who table questions have the undeniable right to obtain answers from

Ministers and of ensuring that those outside the House are not permitted to usurp the rights of the House of Commons.

Mr. Martin Redmond: Further to that point of order, Madam Speaker. I am also concerned about Ministers having all the power and the glory and no responsibility. As for writing to a Minister for information and being referred to a chief executive, you, Madam Speaker, rightly said that you are not responsible for what is said by a Minister in the House. However, could you rule on whether a Secretary of State or other Minister would be responsible for anything said by chief executives of all the quangos that the Government have created?

Mr. Bob Cryer: rose——

Madam Speaker: Order. I intend to answer those two points of order, and the hon. Member for Bradford, South (Mr. Cryer) may be satisfied when he hears my response.
I am grateful to the right hon. Member for Manchester, Gorton (Mr. Kaufman) for giving me notice of his point of order, on an issue about which the right hon. Gentleman has previously expressed concern. I remind the right hon. Gentleman that Ministers remain fully accountable for the work of their Departments, including that of executive agencies. It is for the Minister concerned to decide whether or not to refer a question to the chief executive of an agency for a detailed answer.
Since last October, following a recommendation from the Administration Committee, such answers have been printed in the Official Report. The Benefits Agency operates in exactly the same way as other agencies. Right hon. and hon. Members are able to table questions about its work and to seek an Adjournment debate on particular issues—as did the right hon. Member for Gorton just before Easter. However, I will look further into the matter.

Mr. Cryer: On a point of order, Madam Speaker.

Madam Speaker: Order. There can be no further points of order. I gave a ruling and said that I would look further into the matter. We ought to leave it at that, unless the hon. Gentleman has a point of order on a different matter.

Mr. Cryer: It is, Madam Speaker. As you know, the Government are extending the system whereby chief executives reply to questions about the prison service. I ask you to consider whether it should be necessary for the House—not the Government—to agree to any extension by means, for example, of an affirmative resolution. Then at least the decision to extend that power would be in the hands of the House, not the Executive.

Madam Speaker: I have already made a statement, and I told the right hon. Gentleman that I was taking the matter no further at this stage.

BILL PRESENTED

WELFARE OF ANIMALS AT MARKETS

Sir Richard Body presented a Bill to prohibit the sale of lambs of under twenty eight days of age at auction markets: And the same was read the First time; and ordered to be read a Second time upon 23 April, and to be printed. [Bill 177.]

Coastal Waters (Water Quality Standards) (Costs)

Mr. Patrick Nicholls: I beg to move,
That leave be given to bring in a Bill to provide for the costs of maintaining and improving water quality in coastal waters to be a collective charge on sewerage undertakings; to establish a scheme for determining such costs and their allocation between undertakings; and for connected purposes.
There is in progress in the United Kingdom the greatest clean-up of our coastal water ever undertaken, and it arises directly from the many years of neglect which went before. Change finally comes about because of the EC bathing waters directive, which requires 455 of the United Kingdom's beaches to be brought up to standard, and 130 of them lie in the area of South West Water—a larger number than in any other water company area. It means that 32 per cent. of all the beaches in the United Kingdom covered by the directive are to be found in the south-west.
That those beaches are brought up to standard should be cause for national celebration, but for the people of Teignbridge and the south-west such celebration has become a regional nightmare. What should clearly be a national responsibility is being funded on a local basis. The cost of cleaning up one third of the nation's beaches is being met by just 1£5 million people—or more exactly, the 650,000 paying customers who already receive bills which are on average 35 per cent. higher than in the rest of Britain and which are due to go far higher still.
It will not stop there. We can expect ever-increasing demands to upgrade our water still further. Standards which may be acceptable now will not be acceptable in the 21st century. If we do not rectify the cost mechanism now, the situation will get progressively worse.
The typical south-west domestic household charge of £230 per year will reach £400 at the end of the decade. For many people in an area of relatively high rateable values, those charges can go higher still. Operation Cleansweep is set to cost £2 billion over the next 10 years—expenditure of something like £4 million per week. To fund that, Ofwat has allowed an increase for the current year of inflation plus a staggering 11·5 per cent. The effect of that formula is that bills have risen more than 40 per cent. in just three years.
Let us consider those who have to shoulder those bills in practice. The south-west has a high proportion of elderly, retired people. Just under 26 per cent. of Teignbridge's population are of retirement age, and a great many other people are on the threshold of retirement. Those people have, for the most part, worked hard all their working lives and are now slightly above the income support rate. They are not in the business of asking for state handouts. Their generation and that of their parents have served this country well, yet they see their income slashed by the fall in interest rates. They recoil in horror at the prospect of value added tax on their heating costs. Now, in the autumn of their years, they are faced with costs that they cannot control on the one ingredient that they cannot live without. One can economise on most things. One may be able to make savings on gas and electricity, but for the vast majority of people, savings in water consumption which lead to a reduction in costs are literally impossible.
Let there be no doubt that the south-west is unique. It has the highest charges in the country. The Anglian authority the next highest—has an average charge of £227·5p as opposed to £227·84p, but when one considers the proportion of that which is the sewerage charge, the south-west has the highest charge, at £134£58p as opposed to £120·97 for the next highest charger, Anglian Water. Anglia also has a very different age profile from the south-west. In terms also of average gross weekly earnings, Anglia has within it some of the country's wealthiest counties. By contrast, Devon and Cornwall together are, by that measure, the poorest region of all. By comparison, a largely inland authority such as Thames Water produces a total bill of £138·78, of which the sewerage charge amounts to just £69·39.
The cost of cleaning up the nation's coast should be met on a national basis. No one suggests that the cost of maintaining the Royal Navy should be met on a local basis. It is funded nationally. My Bill would do the same for water by providing for the sewerage element to be equalised across all water authorities.
In so doing, my Bill hardly breaks new ground. As long ago as 1638, John Hampden challenged his obligation to pay taxes to protect the coasts from the attention of Barbary corsairs. One ground for his challenge was that he lived in an inland area. He failed at that time and he deserved to fail. In proposing this mechanism for what threatens our coast today, I am hardly breaking new ground. I am relying on a British sense of fairness.
What objections could there be to my suggestion? Is it sufficient to say that since local people benefit, local people must pay? Can we just glibly remark that because it is good for tourism, it must be good for the local people? Tell that to the many hundreds of people who have written to me about this. Better still, tell it to a 70-year-old widow who receives a retirement pension increase of £10·64 per month to meet increases in council tax and water charges of £11·71. She is not topping up her swimming pool with new squeaky clean water or spending her leisure hours wind-surfing her way around the south-west. It would be stupefyingly complacent merely to reply that water industry investment to raise environmental standards means that charges must rise in real terms, and to suggest that that statement should be the end of the argument.
There will inevitably be those who say that the situation shows that privatisation was wrong all along. In fact, it shows no such thing. Failure to invest in water quality and to face up to the massive pollution that civilisation generates goes back a full hundred years and beyond. Privatisation has enabled massive sums to be invested and it is clearly in the nation's interest that its coastal waters should be as clean as possible. But any policy needs to be adjusted in the light of changing circumstances. Who could honestly have predicted the sudden and immediate demands that the EC bathing water directive would make on us?
Even if it is not the Government's fault that we are in this predicament, only the Government can ultimately deliver a solution. Far from just complaining and whingeing, I have suggested a solution. I have even done so without proposing an increase in taxation and a massive Exchequer grant. The Bill addresses an injustice which becomes more obvious with every day that passes. It is a situation which, in common fairness, cannot be allowed to stand.
I have with me today a number of my west country colleagues who support me in my endeavour and I have presented the Bill and the case for it with all the force that I can command. I commend it to the House.

Mr. Tam Dalyell: I oppose the Bill. No hon. Members in their right minds think other than that coastal pollution is an extremely important subject for Britain. If fair and effective measures were brought forward under a. ten-minute. Bill or any other procedure to do something about coastal pollution, I and others like me would not oppose them.
We listened extremely carefully to the hon. Member for Teignbridge (Mr. Nicholls), but what we heard was political posturing of the worst kind. He said that the problem concerned the west country. People are entitled to special pleading, but it would come better from someone who had not, throughout, voted for water privatisation.
The truth of the matter is that, when the water industry was regarded as a public utility, it was in a far better position to do something about such problems. [Interruption.] Yes, it was. The hon. Gentleman talked about fuel bills, but who was it in their Budget who extended VAT to fuel, and who voted for it?
This is a classic case of Members happily going through the Government lobby arid then whingeing when the consequences of their actions catch up with them. Those who vote in a particular way should be prepared to face the consequences of their actions. This is an attempt by the hon. Gentleman, surrounded by a phalanx of his hon. Friends from the west country, to persuade people in the west country that they are trying to do something about the problem when in fact the fault originated with the Government whom they so loyally supported. This is the worst kind of posturing, trying to have one's cake and eat it.
A sensible Bill on coastal pollution would have made some reference to the Braer disaster off Shetland. There would have been some reference to those tankers going through the Minch and other protected waters, about which nothing has been done. The Home Secretary is said to be an effective Minister, but he has not persuaded the Cabinet to stop those foreign tankers going through the Minch and off Shetland. If this had been a worthy measure, attention would have been paid to that.
No attention has been paid to the real problems of the benthic community—the creatures who live at the bottom of the seas and are affected by disasters such as the Braer. The Bill is not about coastal pollution, but about short-term political advantage, and should therefore be opposed.

Question put, pursuant to Standing Order No. 19 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business):—

The House divided: Ayes 39, Noes 65.

Division No. 230]
[5.05 pm


AYES


Ainsworth, Peter (East Surrey)
Mitchell, Sir David (Hants NW)


Allason, Rupert (Torbay)
Neubert, Sir Michael


Alton, David
Nicholls, Patrick


Ashby, David
Porter, David (Waveney)


Ashdown, Rt Hon Paddy
Rathbone, Tim


Banks, Matthew (Southport)
Robathan, Andrew


Beith, Rt Hon A. J.
Spink, Dr Robert


Blackburn, Dr John G.
Spring, Richard


Budgen, Nicholas
Sproat, Iain


Campbell, Menzies (File NE)
Steen, Anthony


Coombs, Anthony (Wyre For'st)
Streeter, Gary


Dover, Den
Taylor, Matthew (Truro)


Dowd, Jim
Thornton, Sir Malcolm


Evans, Nigel (Ribble Valley)
Townsend, Cyril D. (Bexl'yh'th)


Faber, David
Wheeler, Rt Hon Sir John


Fox, Dr Liam (Woodspring)
Whittingdale, John


Greenway, John (Ryedale)
Wilkinson, John


Harris, David



Hawkins, Nick
Tellers for the Ayes:


Jenkin, Bernard
Mrs. Angela Browning and Sir John Hannam.


Knight, Mrs Angela (Erewash)



Lawrence, Sir Ivan





NOES


Allen, Graham
McKelvey, William


Anderson, Donald (Swansea E)
Mackinlay, Andrew


Ashton, Joe
McNamara, Kevin


Barnes, Harry
Madden, Max


Bermingham, Gerald
Mahon, Alice


Boyes, Roland
Marshall, Jim (Leicester, S)


Callaghan, Jim
Maxton, John


Campbell, Mrs Anne (C'bridge)
Meale, Alan


Chisholm, Malcolm
Michael, Alun


Clarke, Eric (Midlothian)
Michie, Bill (Sheffield Heeley)


Corbett, Robin
Molyneaux, Rt Hon James


Dalyell, Tam
Morgan, Rhodri


Darling, Alistair
O'Brien, Michael (N W'kshire)


Dixon, Don
O'Hara, Edward


Donohoe, Brian H.
O'Neill, Martin


Dowd, Jim
Pickthall, Colin


Dunwoody, Mrs Gwyneth
Prentice, Ms Bridget (Lew'm E)


Eagle, Ms Angela
Prentice, Gordon (Pendle)


Eastham, Ken
Purchase, Ken


Enright, Derek
Raynsford, Nick


Etherington, Bill
Redmond, Martin


Fisher, Mark
Roche, Mrs. Barbara


Flynn, Paul
Simpson, Alan


Garrett. John
Smyth, Rev Martin (Belfast S)


Griffiths, Nigel (Edinburgh S)
Spellar, John


Hinchliffe, David
Steinberg, Gerry


Howells, Dr. Kim (Pontypridd)
Trimble, David


Hughes, Kevin (Doncaster N)
Vaz, Keith


Hughes, Roy (Newport E)
Watson, Mike


Jackson, Helen (Shef'ld, H)
Wigley, Dafydd


Jones, Barry (Alyn and D'side)



Jones, leuan Wyn (Ynys Môn)
Tellers for tbe Noes:


Khabra, Piara S.
Mr. Bob Cryer and Mr. Dennis Skinner.


Macdonald, Calum



McFall, John

Question accordingly negatived.

Orders of the Day — Criminal Justice Bill [Lords]

Order for Second Reading read.

The Secretary of State for the Home Department (Mr. Kenneth Clarke): I beg to move, That the Bill be now read a Second time.
I hope that this Criminal Justice Bill may arouse a little less controversy than the measure on which the House has just divided. It covers a comparatively narrow range of issues—but they are important, and I hope that, in principle, the Bill will command widespread support.
The Bill focuses on a relatively modern phenomenon: financial or so-called white collar crime. Financial crime and fraud are as criminal and as big a menace to society as theft, robbery and burglary. They need to be dealt with as effectively and as severely as other crime. But the increasing sophistication of modern financial markets and modern fraudsters means that the law has to be strengthened and kept up to date in a sophisticated way to eliminate loopholes and remove technical defences. For that reason, the Bill is technical and, I am afraid, complex. It includes measures on insider dealing, on banking and on money laundering. The Bill will substantially increase the powers available to our enforcement authorities to bring fraudsters and insider dealers to justice.
A vital section of the Bill, to which I attach the utmost importance, is the part that tackles the profits of drug trafficking. We need to strengthen our law yet further against money laundering by and on behalf of drug traffickers. The substantial success of our enforcement agencies against the drug trade must be backed by laws which prevent the people detected and convicted from ever enjoying the profits of their trade. We shall be proposing that ultimately the Bill will deal with terrorist finances. Those are extremely serious crimes and I hope that all hon. Members will agree that we need to tackle them with vigour and determination.
The Bill is not a measure that will open up issues of political division or principle within the House. I believe that its aims will attract near-universal approval. I might almost hope—perhaps optimistically—for a little praise for the Government for their prompt action. Recent experiences of Criminal Justices Bills will remind the House, however, that in this sphere it is important to get the detail right.

Mr. Donald Anderson: I should like to ask about the intriguing matter that the Bill will deal with terrorism in due course. Will that mean the confiscation of assets and will it be an amendment to the prevention of terrorism Act? Why was such an amendment not introduced in the House of Lords and why was such provision not in the Bill when it commenced its passage?

Mr. Bob Cryer: That is a good point.

Mr. Clarke: I agree that it is a good point. However, an amendment to an aspect of the law different from that in the first draft of the Bill is required. The time has come to improve the Bill and to extend its provisions to cover confiscation for terrorist offences. From what the hon.
Member for Swansea, East (Mr. Anderson) has said, I gather that he will welcome those amendments when they are presented.

Mr. Graham Riddick: Will the Home Secretary be able to use the Bill to rectify two of the mistakes in the Criminal Justice Act 1991—unit fines and the inability of courts to take previous offences into account? Will my right hon. and learned Friend assure the House that there are no little details in the Bill which will make it more difficult to convict criminals? That was the effective result of the previous measure.

Mr. Clarke: The matters to which my hon. Friend refers are outside the scope of the Bill. I entirely share his concern about the way in which the provisions of the 1991 Act are working in practice. At the moment we are anxiously looking at the way in which the unit fines system works. I share the view of the Magistrates Association that in principle unit fines are right. However, we know that in practice they are producing some odd results, perhaps partly because of the way in which the rules to implement the Act have been drawn up and partly because some magistrates courts are not familiar with their powers.
My hon. Friend the Minister of State who will reply to the debate is personally taking charge of the current review of unit fines. He and I hope that we may be able to get the system to work as closely as possible to the way in which it was intended without the need for more primary legislation. However, we shall introduce primary legislation if that is necessary. I share some of my hon. Friend's concerns about other provisions of the 1991 Act which may not be working out as they were originally intended.
The 1991 Act followed a long process of consultation with the magistrates and the judiciary and others, but now the magistracy and the judiciary are expressing discontent in a way that certainly strikes a chord with me. We shall look at the matter again. If primary legislation is required we shall have to present another Bill. All hon. Members will accept that such matters must be tackled with care because we do not want rushed provisions that will go wrong. As soon as parliamentary time allows, I shall introduce such primary legislation as is called for.
My hon. Friend the Member for Colne Valley (Mr. Riddick) underlines my point that the House should scrutinise the Bill with special care to make sure that we get the law right and strengthen it against money laundering, financial fraud and other offences with which the Bill is designed to deal.

Mr. Robert Maclennan: I should like to put some questions to the Minister before he moves to the more technical parts of the Bill. He says that we should not move too quickly in such difficult areas. Why did the Government move so quickly and consult so inadequately about the drafting of the Bill? For example, the stock exchange was provided with draft clauses at the end of July and was expected to supply answers by the end of August, which is a curious month for consultation in the stock exchange. There was no consultation at all with the CBI. That does not seem to be the right way to embark upon producing the measures that the Government hope to see.

Mr. Clarke: There has been enormous consultation on the part of the Bill that deals with insider trading and that


consultation will continue. I shall deal with that when I come to the relevant part of the Bill. That matter is being handled by my hon. Friend the Economic Secretary to the Treasury who is in his place. He and his Department have been consulted and have submitted draft clauses.
We shall continue to consult, and if we are satisfied that further amendment is required to make the position clear and satisfactory to the legitimate interests of the stock exchange and others, we shall consult on further draft clauses. This part of the Bill is being taken forward with considerable care. It is essential that we do not do anything that will damage the ordinary, legitimate activity of the City, which is so vital to the country's economy. As I have said, we shall consult for as long and as widely as is necessary in the same way as we have consulted carefully so far.

Mr. Barry Jones: The Home Secretary spoke about drugs and in that context part II of the Bill is important. I should like to mention the effective work of the north Wales police in drugs-related crimes at the port of Holyhead and perhaps even on the English border. If the Minister wishes to crack this problem he must ensure that there are more police. I would like an assurance that he will look carefully, seriously and urgently at the request by the north Wales police for 54 policemen on their establishment. Will he please do that?

Mr. Clarke: That is an extremely ingenious request. I agree that the police and the Customs and Excise have been successful in the seizure of drugs and the prosecution of those who are responsible for trafficking. That is not a function of having more and more policemen but of ever-improving intelligence and effectiveness in deploying the specialist squads that are required. As the hon. Gentleman knows, there are more suitable occasions for discussing police manpower and deployment. We have an excellent record on increasing police manpower. It expanded enormously over the 1980s and it is obvious that continued improvements in the way that manpower is deployed is more important than bids each year from police forces.
I propose in the police reforms that the north Wales police and every other force will not have to come to the Home Secretary each year to ask him to decide how many police should be deployed in each county force. I propose much more discretion for chief constables and a strengthened police authority. They will decide how best to deploy the resources that are within the ability of the economy to afford. However, those are matters for another day.

Mr. David Ashby (Liecestershire, North-West): My right hon. and learned Friend spoke about a review of the unit fines system. People, magistrates and judges are incensed by the fact that a middle income man exceeding the speed limit on a motorway at 2 o'clock in the morning will suffer a more severe financial penalty than most drug traffickers. People are not asking for a review of unit fines. They want them abolished and previous powers restored.

Mr. Clarke: I do not agree with my hon. Friend. I have said that I do not like the way in which the unit fines system works. That is why my hon. Friend the Minister of State is again urgently addressing the matter. In principle, courts have always related fines to the ability of the offender to pay. That must continue so that a

comparatively prosperous offender who can afford it will pay a large sum for a speeding offence and a not very well-off thief will pay no more because he may not have the means. However, for a thief and certainly for a drug offender, fines may not be the appropriate penalty: custodial sentences of some kind may be called for.
We are addressing the anomalies that appear to be occurring in practice so that we retain the sensible provision that a financial penalty, when appropriate, should reflect the ability of the offender to pay without some of the absurdities that have occurred. Some of those absurdities were self-inflicted by people without means who did not fill out the form and were fined the maximum amount. Some magistrates do not take any action against people who have not filled in the form but impose the maximum fine. I hope that such hiccups can be eliminated in practice. Meanwhile, we need to look again at the rules.

Mr. Phil Gallie: The Minister was asked about recruiting more police but that is pointless unless they are backed by the actions of sheriffs and judges in Scotland, for example. The public perceive inconsistencies in sentencing but nobody seems to review the performance of sheriffs and judges and, no doubt, magistrates in England. Perhaps my right hon. and learned Friend will bear that in mind.

Mr. Clarke: My right hon. and noble Friend the Lord Chancellor is responsible for the judiciary. No Minister ever comments on the sentence in any individual case.
We give the powers to the courts, and we expect the courts to make full and proper use of those powers. I should stress that it is not part of the Government's policy to inhibit the courts in the proper exercise of their powers. If the Criminal Justice Act 1991 is impeding in some way what the judiciary feel is their public duty, we will rapidly address that and remedy it as soon as we can. In the end, it is a matter for the judiciary to impose the right sentence based on the facts of a particular case. Parliament is here to indicate the range of penalties we think are suitable and give them the powers that they need. I hope that, in Scotland and south of the border, the powers are used.

Mr. Barry Jones: Will the right hon. and learned Gentleman give way?

Mr. Clarke: I must get on. I cannot allow a second question about the police in north Wales. I have been generous enough already, and I would now like to turn to the detail of the Bill.
The House must return—although it may not be willing to do so—to the legal detail. The objects are worthy; the text requires some explanation. I hope to guide the debate by setting out some of the detail as clearly as possible.
Part I of the Bill fills some gaps in our courts' jurisdiction to try offences of fraud and dishonesty with a significant foreign element. It enacts, with some modifications, the recommendations of the Law Commission's 1989 report on the subject. Part I applies only to England and Wales; Scotland and Northern Ireland have their own legal systems, and this part will not apply there. Part I is a largely technical adjustment of existing legal rules, and remains rather daunting reading. It may help if I try to set out briefly the existing legal position and how part I will change it.
The courts in England and Wales exercise a "territorial" jurisdiction, which means, with very few


exceptions, that they are only able to try people for crimes committed in England and Wales. Part I retains this important principle, but is designed to change the rules by which the courts decide whether or not an offence has been committed in these two countries. That is not as straightforward a matter as it might at first appear. As the Law Commission explained in its report:
The planning, preparation and execution of the many operations which are involved in a complicated swindle frequently takes place in several different countries. Under the present law none of the participants can be prosecuted here unless the last event which makes up the underlying crime occurs in England or Wales. Moreover, in cases in which those concerned are detected before they have completed their purpose, it is unlikely that they will be prosecuted in the country where they plan to reap the benefit, and because the underlying crime was not complete here they cannot be tried in England and Wales. In the result, they will in all probability not be convicted anywhere".
I will try to give a more day-to-day example. Let us imagine that a criminal in London places an advertisement in The Times inviting people to invest in a non-existent factory in Japan by paying money into a Tokyo bank account. A victim responds to the advertisement, and instructs his bank to transfer money to Tokyo. When the criminal retrieves his money, he has no need at all to flee to South America—unless he wishes to escape from our winter weather, or has some other purpose—because as things stand he has committed no offence under English law and cannot be prosecuted here. That is because the last element of the crime—obtaining of the proceeds in Tokyo—did not occur here. So, if the victim can be induced to part with his money outside this country, then our courts will not have jurisdiction.
This gap in jurisdiction was largely theoretical in the past but it has become more and more real with the advent of new technology, which has made the transfer of money around the globe an easy and everyday—or, rather, every-minute—activity. We want the law to keep up with the fraudsters, if not ahead of them. So this Bill will provide that, in a case such as I have outlined—where a fraud has a significant connection with this country—our courts will have jurisdiction, whether or not the final element of the crime occurred here.
The substantive fraud and dishonesty offences to which this change will apply are listed in clause 1, and are called group A offences. Experience tells us these are the sort of offences committed by the international criminals at whom this measure is aimed. If the list needs amending in future to catch up with developments in the criminal world, The Secretary of State is given the power by clause 1 to add offences to the list or to delete them, subject to Parliament's approval.
Part I will also catch those who fully intend to defraud others but, through no merit of their own, fail to do so. In the case I gave earlier, the criminal would still be guilty of an offence here even if the police had spotted his advertisement and arrested him before anyone had lost their money.
Clauses 5 and 6 fill another gap in our law by giving our courts jurisdiction over incitements, conspiracies and attempts in this country which are aimed at the commission of the equivalent of a group A offence abroad; there needs to be an equivalent offence in the country

concerned. So, for example, people who plot in this country to defraud victims in Japan will in future be guilty of an offence here and be triable by our courts.

Mr. Ashby: The example my right hon. and learned Friend gives is one of obtaining property by deception in the United Kingdom. There are many cases of this sort and it is the Attorney-General's reference No. 2 of, I believe, 1986 that part 1 is intended to cover. What worries me is whether my right hon. and learned Friend can assure the House that potential defendants will not be put in double jeopardy by being tried abroad—because most of the crime will be tried abroad—and, if they are aquitted abroad, retried over here, or vice versa. It would be a gross injustice if people were to be put in double jeopardy and be tried several times around Europe for offences committed inter-state. Will my right hon. and learned Friend give an assurance that that will not happen?

Mr. Clarke: With great respect to my hon. Friend, I am not sure that it is as clear as he believes it is that the example I give is of an offence in this country. I would incline to the view that it is not. Although I accept that there are conflicting authorities, they are probably sufficiently in conflict for no one to be prosecuted. I think there is little chance of double jeopardy in that particular case unless a person was foolish enough to go to Japan, because it is not necessary to go there to get the proceeds.
We are making it clear that someone in this country who commits a crime the last element of which takes effect in Tokyo is committing an offence here so long as a relevant part of the offence was committed in England. I think that is a valuable clarification of the law.
I quite accept, however, that my hon. Friend has a good point about double jeopardy. We do not want international crime to be dealt with in such a way that people keep being tried in different countries for the same offence. I will be happy to address that point again, or others will in Committee.
We need safeguards, but I think we can assume that in practice prosecuting authorities around the world will not normally keep prosecuting the same person for the same offence as he foolishly moves around the world going from jurisdiction to jurisdiction to collect the full total of his just deserts. I will give more thought to that point and, if necessary, address it in Committee.
Parts II and III of the Bill deal with money laundering and the confiscation of the proceeds of crime. I am glad to say that these parts received most attention in the debates in another place. I think this is the most important part of the Bill as far as the general public is concerned. We can and must have many serious discussions about the causes of crime; debates about the changing nature of society and the restoration of values are important but rarely come to definite or immediately practical conclusions.
The most straightforward specific cause of crime—which is most tangibly within the reach of government, the authorities and the public to tackle—is the abuse of drugs and the illegal traffic in drugs. Police, Customs, the courts and the public must be helped to maintain a relentless fight against drug trafficking; but the trade is immensely, fabulously lucrative, and the best policing efforts will be in vain if the profits are not attacked and retrieved by the courts of every country affected.
One of the main purposes of my visit to Latin America last year was to discuss with Governments menaced by


hugely wealthy drug organisations how we might strengthen international action against that ill-gotten wealth. Britain is in the forefront of countries that have ratified the Vienna convention, legislated against money laundering and got under way with the seizure and confiscation of criminal gains, but we must go further. I am determined that Britain should have one of the most effective—and just—sets of legal provisions in the world to take the fight to where it damages drug trafficking most—the removal of the vast profits which inspire and finance the individual traffic.
Part II will amend and strengthen the confiscation procedures in the Drug Trafficking Offences Act 1986.

Sir John Wheeler: Will my right hon. and learned Friend confirm that these measures and all the other measures that this House has enacted in recent years are effective only if the basis of the intelligence information which the police and Customs authorities receive in the United Kingdom is well organised? Will my right hon. and learned Friend refer to the increasing success of our drug liaison officers overseas and to the way that they channel back intelligence which is used by the regional crime squads, Customs and the police? Is it not that—not necessarily the number of police and Customs officers—which makes their work effective? Does my right hon. and learned Friend agree that it is the effectiveness of the information that is received and how it is made use of that will make the measure that we propose to enact today successful?

Mr. Clarke: I agree entirely with my hon. Friend. His question relates to the detection of drug trafficking in particular but also to intelligence about where the assets are going. Intelligence is the key to any success with drug trafficking or terrorism. Our drug liaison officers around the world are extremely courageous and invaluable people, and they have had enormous success. Our activities in that area are as good as those of any other country. They probably rival those of the United States Drug Enforcement Agency, although that agency enjoys vast resources, compared with ours. The organisation and effectiveness of the individuals who specialise in this work matters far more than just pouring in huge numbers of people to do routine work. Organisation and effectiveness are how one makes progress. That is why we have made substantial progress in recent years.

Mr. Tam Dalyell: Personally I welcome very much the fact that the British Home Secretary went to South America to discuss this problem on the spot and to see for himself, but what has come out of his visit and what is the strategy for persuading the hard-pressed Governments of countries such as Colombia and Peru to do something, however willing they may be, about an acute terrorist problem for them?

Mr. Clarke: If I may confine myself to Colombia, we provide considerable material assistance to the Government of Colombia, who are fighting courageously against very powerful drugs cartels which threaten their ability to govern their country. The Government of Colombia are on the right side in this struggle and they are making good progress. We are contributing very much to the training of their most effective police units, which operate in the jungles and search for the coca itself and the laboratories. We are also giving valuable assistance in

developing their criminal justice system. They are therefore setting up a much more effective system for prosecuting and bringing to justice those whom they arrest. Since I went to Colombia, we have given further material support to the Colombian Government for that purpose.
I discussed also with the Colombian Government how we could take further forward bilateral agreements with them on the confiscation of the assets of drug traffickers. The trade is often organised by a combination of Colombian and British criminals, working in international organisations. I hope that we shall make progress on that front, too. We are actively working with the Colombian Government. It is important that we, from our end, as well as the other European countries and the United States, work with the Colombians against something which is just as much a threat to Colombia as it is to ourselves and which needs to be tackled at international level.
Part II will make its contribution to the Bill by strengthening yet further the procedures that were introduced in the 1986 Act. Hon. Members will recall that when it was introduced the 1986 Act was described by some people as draconian, but its measures were necessary and justified. The 1986 Act was intended to remove the profit motive by allowing the confiscation of all the trafficker's proceeds from drug trafficking, following conviction. The Act was also intended to ensure that the profits from drug trafficking could not be recycled to fund yet more trafficking. That Act needs to be strengthened.
This part of the Bill—clauses 7 to 15—is largely based on the report of the Home Office working group on confiscation, which was published in May 1991 for consultation. That group was established in response to the report of the Home Affairs Select Committee on drug trafficking and related serious crime, published in November 1989. The Home Office working group found that the 1986 Act had worked reasonably well, but it identified a number of important practical difficulties in its operation.
I do not propose to go through each clause in detail. Instead, I shall draw the attention of the House to those provisions which I consider to be the most important.
Clause 7 will end the uncertainty that has arisen in the courts over the standard of proof applicable in confiscation hearings. It makes it clear that the standard applicable is the civil standard—and its probability. This was, I believe, the intention when the 1986 Act was passed, but it was not made clear on the face of the legislation. Clause 7 also relieves the court from following the confiscation procedures in the 1986 Act each time that it convicts a drug trafficker.
Confiscation will take place only when notice is served on the court by the prosecutor, or at the court's discretion. This will filter out those cases in which there is obviously little or no benefit, or no realisable property. This does not mean that we are softening our approach to drug traffickers. The minor cases that do not attract a confiscation hearing under the new arrangements will continue to be dealt with severely by means of fines and forfeiture orders, as well as by imprisonment.
Clauses 12 and 14 will allow the court to confiscate proceeds in circumstances where that is not possible at present. Clause 12 will allow the prosecutor to return to the court within six years of a conviction for drug trafficking to seek a revaluation of the offender's benefit from drug trafficking, where further benefit has


subsequently come to light. Clause 14 will enable a confiscation order to be made, even if a convicted trafficker dies or absconds. Confiscation will also be possible where a defendant absconds before conviction. We have included safeguards, such as rights of audience for third parties at confiscation hearings and compensation where an absconder returns and is actually acquitted.
Part II also contains the primary legislation necessary to implement a European Community directive on money laundering, following the proposals set out in a Treasury consultation paper last May. The United Kingdom was closely involved in the drafting of this directive. Since it draws heavily upon the 1988 United Nations convention on drug trafficking and money laundering, which the United Kingdom ratified in June 1991, very little legislation is necessary.
Three new or extended criminal offences are created in the money laundering area: first, failure to report knowledge or suspicion of money laundering gained in the course of employment; secondly, acquiring, possessing or using the proceeds of drug trafficking for less than adequate consideration, in the knowledge that they are such proceeds; and, thirdly, prejudicing an investigation into money laundering by tipping off a third party.
Part III deals with the confiscation of the proceeds of crime in general. The effect is that a number of the changes made to the Drug Trafficking Offences Act in part II, which I have just described, are read across to other organised crime in part III, by amending the general confiscation provisions in part VI of the Criminal Justice Act 1988.
This is an extremely significant change. We are extending the existing and most of the new drugs money laundering offences to crime in general. Until now, it has not been an offence to launder the proceeds of any crime other than drug trafficking and, in certain restricted circumstances, terrorism. That allowed a suspected money launderer to say that the money he was dealing with came from pornography or serious fraud rather than from drug trafficking and enabled the suspect to avoid being convicted of money laundering. I am sure that hon. Members will agree that that was absurd and indefensible. I am pleased to say that the banking and financial communities have given their full support to these new measures, which extend the money laundering provisions to most organised crime. Ministers are extremely grateful for their help.
I am also glad to be able to announce to the House that the Government intend to introduce in this House amendments to the Bill in Committee to reproduce, in the terrorism legislation, many of the changes being made in part II of the Bill to the confiscation and money laundering provisions contained in the Drug Trafficking Offences Act 1986. Part III does not, as at present drafted, apply to the proceeds of terrorist offences because they are not covered by part VI of the Criminal Justice Act 1988. However, the Government regard tackling terrorist funds as an equally high priority.
The United Kingdom was the first country to introduce legislative measures against terrorist finances. These measures have given the police an additional and

invaluable tool, which has enabled them to tackle the funds themselves and to obtain information on the movements and activities of the terrorists.
Finance remains the lifeblood of terrorist organisations. Such organisations and those who handle money on their behalf have become increasingly sophisticated in the way in which they raise and launder money. Disrupting the fund-raising efforts of terrorists and confiscating their resources and the proceeds of activities should be as important a new tool against terrorism as it should be against drug trafficking and other serious organised crime. I am sure that the House will agree that it is only right that the measures that are taken against terrorists' finances should, as far as is possible, match those taken against drug proceeds. Personally, I hold both forms of crime in the same profound contempt.

Mr. Tony Blair: As I understand it, once someone has been convicted of drug trafficking, the proceeds, whether or not they are related to that specific offence, can be confiscated. Will the same apply to terrorism and other offences?

Mr. Clarke: Some confiscation powers are already available under the prevention of terrorism legislation. In Committee, we shall table amendments to cover the new provisions on laundering, but first we must decide which of the provisions on drug trafficking should be read across to terrorists' finances. That will enable us to consider the total amount that has been raised and how far the assumptions which are an important part of the drug trafficking provisions should apply. We shall table amendments that, as far as is sensible, reflect the drug trafficking money laundering provisions.

Mr. Donald Anderson: Are the provisions on confiscation and on money laundering, which I believe stem partly from an EC directive, in place in other EC countries, because what the Home Secretary is saying makes the degree of co-operation at EC level under the third pillar of Maastricht even more important? It would be helpful to know at some stage whether these provisions and those on terrorism operate in other EC countries.

Mr. Clarke: All EC countries are making the changes to their domestic law necessary to apply the directive. The United Kingdom was at the forefront of countries pressing for a directive, because measures against drug trafficking and terrorism are not effective unless they apply throughout the European Community. Without notice, I am not sure how many countries have completed the legislative steps. I believe that the United Kingdom is ahead of others, but we are all slightly beyond the date by which we are meant to have implemented the directive. My hon. Friend the Minister of State may be able to give a more specific reply, but I am sure that there is no hesitation within the Community and that all 12 countries will fall in line with the highly desirable directive.
Part IV is, strictly speaking, the Treasury part of the Bill, which is why my hon. Friend the Economic Secretary is on the Bench. It amends and restates the law on insider dealing and in so doing implements the EC directive on the subject. Hon. Members will, I hope, agree that insider dealing is crime. Securities markets play a vital role in financing companies, on which our prosperity ultimately depends. Markets also hold a large proportion of people's savings invested directly or on their behalf by institutions.
If those markets are to operate smoothly, they must inspire the confidence of investors, and an essential element of confidence is fairness. Insider dealing, if unchecked, destroys that confidence, which is why the Government made insider dealing illegal in 1980.
We believe in the benefits of having an EC directive on insider dealing, and Britain again played a leading role in negotiating the directive. With effective legislation in place across the Community, investors will be able to invest more confidently across Europe and to take advantage of the opportunities provided by the single market. The directive's detailed provisions will greatly assist in the pursuit of insiders who seek to cover their tracks by dealing across borders.

Mr. Ashby: My right hon. and learned Friend rightly says insider dealing is effectively theft on a grand scale from a number of poor investors. Is part IV covered by part I, and if not why not?

Mr. Clarke: Off the cuff, subject to correction by my hon. Friend the Minister of State in his reply, it must be. Part I will cover a range of international crime and if insider trading is being conducted across borders, the same rules as set out in part I will apply. If my off-the-cuff response is incorrect I shall ensure that a correction——

Mr. Donald Anderson: It is not a category A offence.

Mr. Clarke: The hon. Gentleman points out that it is not a category A offence. He has had an opportunity to look it up, but he may be wrong. A more considered reply will be given later. The Economic Secretary is also taking the opportunity to look at this part of the legislation, for which he is directly responsible.
Nevertheless, the desirability of moving on insider trading is accepted by all of us and the Bill extends our legislation on insider trading to areas of conduct covered by the directive that are not currently illegal but are generally accepted as being wrong. I want to make quite clear to the House the Government's determination to ensure that legitimate business practices will not be jeopardised. I know that some fears have been expressed in the City and elsewhere, but nothing in the Bill will prevent the sort of contact between companies and investors that properly takes, place today. The Bill will not require changes to the legitimate practices of investment analysis or mean modifying underwriting arrangements.
Indeed, much of the new legislation is similar to existing law. It will continue to be an offence for an insider who possesses inside information or someone who has obtained inside information from an insider—in deference to views expressed in another place I will, as far as possible, avoid describing that someone as a "tippee", which is a particularly poisonous addition to the English language—to take advantage of the information by dealing in securities to make a profit or avoid a loss. It will continue to be an offence for an insider or tippee to encourage someone else to undertake such dealing and for them to disclose inside information.
The definition of inside information is little changed from our present legislation. It includes information that relates to particular securities or to a particular issuer or issuers of securities, but not to securities generally or issuers of securities generally. The information must also be specific or precise, not have been made public, and be such that, if made public, it would have a significant effect

on the price of securities. But unlike existing legislation, which applies only to companies securities, the new legislation will apply to all listed securities. It will apply to gilts and local authority stock and all securities traded on exchanges throughout the Community rather than just those that operate in this country.
Under the Bill, any individual with direct access to inside information will be an insider; they will no longer have to be connected with a company, as the present law requires. The Government believe that this change, which reflects the directive, is desirable because it is possible for someone to have direct access to price-sensitive information without being connected with a company.
The range of circumstances in which insider trading is prohibited will be widened. The Bill's prohibitions apply to all transactions which involve a professional intermediary, whether on or off market. The move from the trading floor to screen-based trading has made the market much more difficult to define than when legislation was passed in 1980. The new legislation seeks to treat the market in terms of those transactions that are likely to contribute to the price formation process for a security. As a result, the new legislation will apply to dealings in Eurobonds, which are generally listed within the Community but traded off market.
There are two further ancillary offences in addition to dealing—disclosing inside information to someone else and encouraging someone else to deal.
However, I should make it clear that innocent activity will not be penalised. Conduct will not amount to a criminal offence unless a person knows that the information he possesses is inside information and that he has the information as an insider or directly or indirectly from an insider. For example, someone who deals while in possession of information that he believes to be in the public domain will not fall within the ambit of the legislation even if his or her belief turns out to be misplaced. There will be no offence where someone did not intend to use inside information to make a profit or to avoid a loss because he would not be "taking advantage" of the information. There are various exemptions and limitations to ensure that the legislation does not impact
As for penalties, the Government made it clear in 1980 in their response to the Select Committee on Trade and Industry's report on company investigations that we proposed to retain the criminal law as the primary means for punishing insider dealers. Accordingly, the Bill carries forward the penalties that apply under our existing law, which are up to seven years' imprisonment with a fine.
The Bill's insider dealing provisions are the result of considerable discussion between the Treasury, practitioners in the City and representatives of industry in general. The hon. Member for Caithness and Sutherland (Mr. Maclennan) complained, but there has been consultation on the broad principles of the legislation and on an initial draft of the clauses in the summer, and consultation has continued since the Bill was introduced in another place.
As I have already said, the Government are aware that there is still a wish for greater certainty about the effect of the legislation. We have listened to the representations made and will continue to do so, and we shall make further amendments where we are convinced of the case for so doing.

Mr. Donald Anderson: Why has the existing legislation on insider dealing been so ineffective? During the past five years, there have been 30 prosecutions but only 13 convictions.

Mr. Clarke: I do not think that those figures are wholly accurate. They are in the right ball park but they are not spot on. There have been convictions. The total number of convictions is not the only measure by which to judge the effectiveness of such a provision. I am sure that the provision has a considerable deterrent effect on what would otherwise be trading of below acceptable standards in securities, which is treated as a serious criminal offence in this country.
We have played a part in introducing the fresh directive, which is giving rise to the need to strengthen and extend the law. It is extremely important for London's reputation as a financial centre that our standards are as high as any others. We must make it clear that those who make improper use of insider information will be treated as criminals, brought before the courts and prosecuted. If the hon. Member for Swansea, East (Mr. Anderson) believes that the existing legislation is not sufficiently effective, I am sure that he will welcome the Bill, which seeks to make the law more effective and extend its scope.

Mr. Maclennan: What the Home Secretary says about the deterrent effect of the legislation may be true; it is hard to prove. However, he will be aware that there is widespread and genuine concern, expressed most notably by Lord Alexander of Weedon on Second Reading in another place, that many cases of alleged insider dealing, which have been brought to the attention of the Department of Trade and Industry by the stock exchange, among other authorities, have not led to effective prosecution. There are serious questions about enforcement in cases where there is significant evidence.
In preparing this legislation, has the Home Secretary considered whether there is a need for parallel self-regulatory measures for the City or other institutions in order to provide a civil remedy to back up the effectiveness of the criminal remedy?

Mr. Clarke: Concern has been expressed in both directions. Some people in the City are worried about the ordinary, legitimate practices of investment analysts and others being threatened. We can reassure those who have such fears and will continue to do so during the consultation process. Others are worried that we do not always enforce the law as strictly as we might, enforcement being in the hands of the Director of Public Prosecutions or, more often in practice, the Secretary of State for Trade and Industry. However, cases are brought.
Sadly, it is the case that we must first get the drafting right so that the law can be enforced effectively. That is why we shall continue to consult Lord Alexander and anyone else who wishes to give his views. Secondly, there must be some self-regulatory provisions. There is a role for the stock exchange and the City generally to ensure that the criminal law is paralleled by proper self-regulation by those responsible for the markets. People such as Lord Alexander and other leading lights in the City will be anxious to ensure that self-regulatory activity also exists.
Finally, part V of the Bill contains various minor measures. I do not need to trouble the House with them except to mention clause 43. It extends the jurisdiction of United Kingdom courts where a fraudster takes part in or

organises here fraud against the European Community budget in other Community countries. It will ensure that the United Kingdom is and is seen to be taking positive action against Community fraud, and will help to allay the legitimate fears expressed in both Houses.
The Bill deals with a number of serious mischiefs which I hope that all hon. Members will condemn. It makes a number of changes that will not harm legitimate business or threaten the law-abiding, but it will greatly improve our ability to investigate and prosecute a wide range of financial crimes. I know from earlier interventions that hon. Members are concerned about various criminal justice issues. They may be disappointed about the scope of the Bill which started life in another place last October. They may feel that it does not go wide enough to tackle all their concerns, but there will be other opportunities—I hope before too long, if I have my way—for us to consider many of them.
Although there are some pressing problems outside the scope of the Bill, that would in no way detract from its importance. We are dealing with very serious crime. The Bill will significantly strengthen the ability of the enforcement authorities and the courts to deal effectively with white collar crime and will do so in ways that I hope all hon. Members will be able to support. I commend the Bill to the House.

Mr. Tony Blair: As the Home Secretary said, the Bill spans a disparate set of issues, but they have in common a concern for the growing internationalisation of crime. The impact of modern communications, travel, computer technology and cross-frontier trading has given renewed scope to organised criminal activity. It is essential that the law keeps pace and that old common law rules—or, indeed, old statute—which are right for one era do not continue unamended or unchanged when plainly wrong or inadequate for another.
There is no disagreement about the general purpose of the Bill, although there is some disquiet about the drafting of some parts and the content of specific provisions. They may be archetypal matters for the Committee stage and for those who will have the pleasure of participating in that stage, but they are also important matters to be raised on Second Reading. I begin with the issue of drugs and drug trafficking, which I believe will be of paramount concern to hon. Members and the public.
There is no doubt that drugs are a dangerous menace to our society. There is increasing evidence of a rise in the number of drug addicts, of a link between drugs and crime, the prevalence of drug trafficking and, perhaps most alarming of all, the number of young people even of school age who are being drawn into early experimentation with and use of drugs.
I do not think that anyone, whether working with drug abusers or in drug enforcement, believes that the problem is diminishing. It is not. It is growing, and the greatest danger of all is complacency in the face of the threat that drug abuse poses to our country. The figures for the latest year for which they are available show, for example, that the number of addicts notified to the Home Office rose by some 17 per cent. and that that followed a 20 per cent. increase the previous year. The number of new addicts has risen by a similar number. Although the numbers of seizures of course reflect success by our drug enforcement


agencies, in 10 years they have risen more than threefold, and seizures of heroin have increased by more than 200 per cent. Even making allowances for changes in procedures and greater success by the drug agencies, those figures should cause concern.
The number of persons found guilty of drug offences has risen almost threefold in 10 years. Again, the most worrying feature is the rise in the number of young drug offenders. The number of offenders under the age of 17 has risen tenfold in as many years, and the number of those between 17 and 21 has risen fourfold over a decade. Offenders under 21 represent 40 per cent. of offenders but 80 per cent. of the latest yearly increase in offending.
Anybody who knows the King's Cross area in London, as do hon. Members who pass through it on their way to their constituencies, will know of the appalling drug problems that have recently been highlighted by the Independent on Sunday and other newspapers. There have been about seven deaths from drug-related causes in the space of nine days. The police in those areas and in many other parts of our inner cities do their best in extremely difficult circumstances. My hon. Friends the Members for Holborn and St. Pancras (Mr. Dobson), and for Islington, South and Finsbury (Mr. Smith) have campaigned long and hard on the problems of King's Cross, and have raised the issue specifically with the Home Secretary. I hope that he will respond. positively.
The drugs problem is increasing, yet Government policy in other areas, not only in the Home Office sphere, is withdrawing some of the most vital support needed in the fight against drug abuse. For example, until the end of last month, the. Department for Education had 100 drug advisory posts, but it has now ceased to fund them and says that it is up to local authorities to do so. The plain fact is that in present circumstances local authorities wit not have the resources to fill the gap. That means that those posts, which perform a great role in educating our young people about the dangers of drugs, will no longer exist. It cannot be sensible to pass legislation that, rightly, bears down on those trafficking in drugs, yet at the same time to allow other Government Departments to make decisions in other areas that run entirely counter to the fight against drugs.
Exactly the same could be said about cuts in the youth service. Three quarters of those involved in that service expect to make cuts this year, and the urban programme faces similar problems. There are cuts in residential provision for drug addicts and abusers.
A pamphlet recently published by the trade unions representing people working in Customs and Excise estimated that, as a result of changes in funding, about 400 Customs officers engaged in the war against drugs would be lost. I do not know whether that estimate is correct; I hope that the Minister who replies will deal with the question. Again, it would be bizarre if we attempted to deal with people who had been caught committing drugs offences and had been convicted if in other areas we were taking steps that undermined the fight that we should all support.
Although the number of drug trafficking offenders has declined in proportion to the number of drug offences overall, there is no doubt that drug trafficking into the United Kingdom is increasing. The value of drugs seized by the Customs and Excise has multiplied by a factor of about 20 over the past few years. The United States estimates that drug seizures account for about 10 per cent.

of the drugs destined for the United States market. If we apply the same criterion to our seizures, we find that drugs with a street value of as much as £2,000 million enter the United Kingdom every year.
The report on "Drug Trafficking and Related Serious Crime" published by the Home Affairs Select Committee a few years ago said:
The National Drugs Intelligence Co-ordinator … estimated that there is at least £1,800 million derived from drug trafficking in the United Kingdom. In its written memorandum, the NDIU noted that such vast amounts of money circulating within the legitimate banking system may have a destabilising effect on smaller financial institutions. The NDIC also indicated that, despite the Drug Trafficking Offences Act 1986, the United Kingdom continued to be a major centre for money laundering. Indeed, he said that the United Kingdom was regarded by the United States, Canada and some others as an offshore banking system
On the basis of that report and of the evidence that we have accumulated, there is no doubt that we must fight the drugs problem at both a national and an international level.
I was interested to hear the Home Secretary make a point arising from his visit to South America. Reading the many detailed background papers, I came across the bilateral confiscation agreements made between our country and other countries whereby we can confiscate the proceeds of drug trafficking via arrangements made with other countries to facilitate that process. Clearly that is most important in helping to crack down on people engaged in drug trafficking. I noticed that absent from the list of countries with which we have such agreements were the names of countries such as Colombia, Thailand, Afghanistan and Peru. When the Minister winds up, perhaps he will tell us whether any progress has been made towards concluding agreements with those countries. It seems important that some of the main drug trafficking centres should have reciprocal arrangements such as those that have worked well in other areas.
At this stage I raise the problem caused by drug traffickers' use of Nigerians, especially Nigerian women, as drug couriers to enter this country. Apparently, large numbers of poor Nigerians, especially women, receive long gaol sentences here. I understand that a recent survey revealed that all the children taken into care by the London borough of Hillingdon, in which Heathrow lies, are Nigerian. That is an immense problem, to which the right hon. Member for Westminster, North (Sir J. Wheeler), as chairman of the all-party penal affairs group, drew attention last year.
I should be obliged if the right hon. Gentleman would comment on the concern that, although, for obvious reasons, the sentences are long, they are not having any deterrent effect. Can he tell us what arrangements are being made to bring home to people in Nigeria the consequences of undertaking such actions, and the need to clamp down on that drug trafficking route?
Like the Home Secretary, I feel that, whether we like it or not, it is correct to deal with the detailed provisions of the Bill. We supported the Drug Trafficking Offences Act 1986, and we support the basic thrust of the Bill. Some of the changes that it makes are welcome, but some raise serious issues of principle that it is right at least to canvass on Second Reading. As has been said by hon. Members on both sides of the House, that is especially right in view of the problems that have arisen as a result of the Criminal Justice Act 1991. We should take special care to ensure that the Bill is well drafted.
The 1986 Act allowed the police to obtain information about a suspect's affairs and to restrain the removal of his assets before trial—that is rather like a criminal form of a Mareva injunction. The court was given the power to make an order after conviction confiscating the entire proceeds of drug trafficking from the offence for which the person has been convicted and also from other drug trafficking. The court was also given the power to assume that the assets of an offender, certainly for up to six years before the proceedings, were the proceeds of trafficking unless the defendant proved otherwise.
Those powers in the 1986 Act have been described as draconian. Clearly they are draconian; they were meant to be. Draconian powers are fully justified because of the appalling evil that they are designed to counter. It is clear that confiscation orders have been of considerable use. Perhaps the Minister will give us the precise figures when he winds up, but I believe that about 1,000 such orders have been used in the past year. None the less, because of the nature of those powers, it is important to consider them carefully and ensure that they are drafted and used properly.
The debate in another place has been of great benefit in preparing for this debate. The discussions were of high quality and went into great detail, and they raised a number of points which deserve investigation.
The Bill makes some significant changes to the 1986 Act. At present, confiscation proceedings are mandatory; they will now be permissive if the prosecution wants them to be so. If the prosecution declines, the court has the power to order them. Under clause 8, as the Home Secretary said, the court can determine sentence before confiscation, rather than, as now, having to complete confiscation before sentence.
The clause introduces two further changes which have aroused some controversy and at which it is worth our while to look for a moment. First, the clause changes the standard of proof for the confiscation of property from drug traffickers from the criminal to the civil standard—in other words, from "beyond reasonable doubt" to "on the balance of probabilities". Secondly, it obliges the court, rather than simply permitting it, to make statutory assumptions about the defendant's assets. Whatever assets a defendant has, the assumption is that they are the proceeds of drug trafficking.
There are now, therefore, a number of fairly unusual features in the procedure for confiscation. That was the point of my intervention in the Home Secretary's speech and I may return to the matter in a moment. We should examine the justification for those features.
First, the proceeds that can be confiscated under the 1986 Act and under the Bill are not just those that are the product of the particular offence for which the person is being tried, but all proceeds from drug trafficking, whether a criminal trial has taken place or not. Secondly, to prove that such assets are the proceeds of drug trafficking requires only a civil standard of proof. Thirdly, the court is obliged to assume that those assets are the proceeds of trafficking unless the defendant shows otherwise.
As I read the decision of the Court of Appeal in the case of Redbourne, the effect of the assumptions not being disproved is that they stand as facts. In other words, the confiscation applies to all drug trafficking irrespective of

the particular offence, and the court is entitled—indeed obliged—to assume, unless it is proved otherwise, that all the property of the defendant is the proceeds of drug trafficking.
That point caused some concern in the other place. If the issue of the standard of proof is taken in isolation, it could be argued that the recovery of proceeds from drug trafficking going wider than the particular offence is almost akin to a civil suit for fraud, for example, and that, therefore, a civil standard of proof is not unreasonable. However, the accumulation of a lower standard of proof plus the assumptions that go a long way towards establishing proof and their mandatory nature somewhat restrict the ability of the court to take into account all the factors that it wishes to take into account.
Whatever people think about the Criminal Justice Act 1991, the real problem with it is that it imposes far too much of a straitjacket on the court in relation to sentencing. We should at least be careful, especially in relation to the mandatory nature of the assumptions, in deciding whether it is necessary to go that far. There is no evidence of which I am aware that courts have been hesitant about assuming that the assets of a defendant are the proceeds of drug trafficking. In the absence of any concern that courts have been reluctant to apply the provisions, that point is at least worth looking at.
I am not sure whether the Home Secretary dealt with this point. The proceeds of other offences, such as armed robbery or organised crime other than drug trafficking, carry no such assumptions and only the proceeds of a specified crime can be confiscated. Drug trafficking is treated differently from armed robbery and from other organised crime. I am not sure whether the Home Secretary wants terrorist offences to fit into the category of drug trafficking or of armed robbery. In any event, there is a clear disparity in the way in which such offences are treated. No doubt the Minister of State will tell us the reason for that. It may be that experience shows, for example, that the life styles of drug dealers are so bound up with drugs that it is reasonable to apply different procedures. If we are making that distinction, it is right that we should justify it properly.
Clause 18 deals with money laundering. Under the clause, a person is now to be guilty of an offence if "he knows, or suspects" that another is money laundering, and if he learns that fact in the course of his work and then fails to disclose it. I assume that that is an attempt to comply with article 7 of the European directive of June 1991, because the directive uses the words "know or suspect" in relation to money laundering.
It has been said in the other place that to make someone guilty of a criminal offence merely because he suspects that somebody is guilty of money laundering rather than because he believes it or knows it places too low a burden on the prosecution. I should like the Minister to deal with two points on that. First, will he confirm that a subjective test will be applied under the legislation? In other words, will the prosecution have to prove beyond reasonable doubt that the accused suspected that money laundering had taken place and not merely that it was reasonable for him to do so or that he had grounds for doing so? Will the prosecution have to prove that he possessed that subjective state of mind at the time?
Secondly, and perhaps more importantly than anything else, the provision will make a great deal of difference to the way in which banks and other financial institutions


operate. It will impose a fairly high degree of awareness on bank officials arid others about the nature of the money with which they are dealing, and about its possible sources and the uses to which it will be put. It is right that we do that, but we should understand that there will have to be great changes in the ways in which those financial institutions operate. If there are not, quite lowly officials within the banking system may find themselves responsible in circumstances in which the real failure is the failure of higher management to give them proper training, to instruct them on the right things to look for and to ensure that they are able properly to keep track of the money with which they are dealing.
A report that repays reading if one can afford it—fortunately, I did not have to afford it—is the Touche Ross report on money laundering and risk which contains the results of a recent survey. The facts revealed are fairly shocking. First, it is estimated that the total sales—this is a truly staggering figure—of cannabis, heroin and cocaine in the United States and in Europe in 1989—more than three years ago—were more than $120 billion, of which $85 billion was laundered. If the Home Affairs Select Committee is right in believing that much of the laundering takes place in this country, that is reason enough for strong legislation.
The report then says that there were low levels of awareness and that fewer than 50 per cent. of stockbrokers or life insurance companies had educated staff on the prevention of money laundering or introduced specific controls. The report says that there is a clear need for financial institutions to establish proper practical guidance so that money laundering is spotted at an early stage.
It has come to my attention that the number of disclosures of money laundering following this legislation is estimated to triple from about 5,000 a year to as many as 15,000. I hope that the Minister will deal with the issue of resources, because such disclosures will require much more investigation and possibly more tricky investigation, as even a suspicion will have to be reported. It is clear that anyone in a halfway responsible position in a financial institution will make it absolutely clear that at the first opportunity he will draw to the attention of his superiors his suspicion that such activities may be taking place.
The Home Secretary dealt with the problems of the jurisdiction of the courts. I make one particular point about that. It is obvious at the moment that, if the last act necessary for the completion of an offence takes place in this country, the courts have jurisdiction. If it does not, they do not. The central change is that under the Bill, if any relevant act—that is, any act necessary to prove a conviction—takes place here, the courts will have jurisdiction. That follows in part from the recommendations of the Law Commission in April 1989.
We live at a time when large sums of money are controlled by international fraudsters and it is surely right, and in accordance with the principles of comity of nations, that, if any part of the action takes place here, there is jurisdiction. I gather that the Bill was substantially amended in the House of Lords, and I pay tribute to the work of Baroness Mallalieu in ensuring that the provisions were considerably tightened up.
Finally, let me deal with the issue of insider dealing. Let us be clear that everyone wants to root out insider dealing: it destroys the integrity of the market and undermines confidence in share transactions. There is no doubt that the present law—or, perhaps more accurately, the present

system—of investigating and prosecuting insider dealing leaves much to be desired. I understand that, over the past five years, the stock exchange has drawn the Department's attention to more than 100 cases of suspected insider dealing. There have been some 33 prosecutions—the Minister will no doubt tell us the exact figure—only about 16 of which have been successful.
In the other place, Lord Alexander suggested that there should be a City regulatory authority to exercise a parallel jurisdiction—to force, for example, the disgorging of profits or a penalty or redress—running alongside the criminal law. I hope that the Minister will comment on that. My hon. Friend the Member for Edinburgh, Central (Mr. Darling), who speaks for the Opposition on such matters, thinks that that is worth investigating. As he has rightly said, the overall regulatory system may be so inadequate at present that any attempt to run a parallel system alongside the criminal law may fail. Once again, however, the objectives are in danger of being damaged by inadequate drafting.
The Home Secretary said that this part of the Bill made few changes to the law. I think that the changes that it makes are quite significant, and they have certainly given rise to concern. In place of the present 1985 Act definition of insider information as information not generally known to people dealing in the relevant securities, there is a new definition of insider information, which includes information which
has not been made public".
That is a much broader definition. That may be right and, again, it follows the wording of article 1 of the 1989 European Council directive. But what is public and what is not will be pretty difficult to define.

The Economic Secretary to the Treasury (Mr. Anthony Nelson): I refer the hon. Gentleman to section 10 of the Company Securities (Insider Dealing) Act 1985, which is broadly similar to what is included in the Bill. It starts from a different place in working up compliance with the directive, but broadly the effect is the same—so it should be business as usual.

Mr. Blair: With great respect, I am not entirely sure that that deals with the point. The critical definition concerns the nature of the information itself. At the moment, insider information is defined as information that is not generally known by those who deal in the relevant securities. Under the new definition, insider information is simply information that
has not been made public".
That immediately gives rise to the question of what "making public" means. In other words, what constitutes publication will determine what are the necessary elements of an offence.
I am not sure that section 10 of the 1985 Act deals with that point, although that can no doubt be considered in Committee. Concern has been expressed among analysts, fund managers and others that the provision could inhibit entirely proper dealing. A brief has been prepared by Clifford Chance, among other leading solicitors' firms which operate in the field. It is worth taking such concern seriously, and I hope that the Minister will do precisely that.
The definition of dealing is to be broadened so as to include those who do not receive information direct from an insider. This is a somewhat technical point, but the defence under section 3(2) of the 1985 Act allows the use


of market information about a given transaction when that information is being used for the purposes of completing a transaction. That is most obvious in takeover activity. Under the Bill, however, market information can be used, but only when it is "reasonable … to deal" in that information. Concern has been expressed that the term "reasonable to deal" is so broad that it could give rise to uncertainty as to whether a criminal offence was being committed. I understand that the Treasury has said that it will issue guidelines on that point. The Confederation of British Industry and others have said that the guidelines should be statutory. I should have thought that, if we are constructing a criminal offence, the more that is in the statute itself rather than the guidelines, the better.
The provisions are technical and complex but, as the Home Secretary said, they are also important—and fundamental to the fight against drug abuse. In all these matters, a common thread emerges: crime is rising rapidly. In each area covered by the Bill, enormous problems of detection and prosecution occur. Ultimately, a criminal justice system means not just effective laws and effective enforcement but strong policies of prevention. The war against drugs and drug abuse means tackling demand as well as supply. The rooting out of insider dealing needs a culture of honesty and openness in the City as well as rules that forbid such dealing.
The Bill is one part of the fight against drug abuse and malpractice—and that fight is only one element in the fight against all types of criminal activity. The scale of crime in Britain today is a scandal. It weakens our ability to function successfully as a society and it destroys the quality of life for many innocent and law-abiding people. For the reasons that I have given, we shall not oppose the Bill on Second Reading, but we give the Government notice that, in the coming months, we shall grasp every opportunity to harry them for their failure to act against that scandalous level of crime, to bring forward coherent policies to combat it, and to treat crime as seriously as the people of the country they govern.

Mr. Tim Rathbone: First, I add my congratulations to the Home Office team—and to my right hon. and learned Friend the Home Secretary, in particular—on this further effort by the Government to tackle the horrible problems of drug misuse. It is worth reminding ourselves that the Bill flows from the Drug Trafficking Offences Act 1986, which, in establishing new crimes, giving the police and Customs and Excise substantially increased investigatory powers and establishing regional drug squads, not only represented an incredibly important step forward in this country but gave other countries a lead in the fight against drug misuse. I welcome the Bill.
My right hon. and learned Friend the referred to the way in which the Bill introduces a civil standard of proof—the balance of probability—rather than the criminal standard of "beyond all reasonable doubt". I seek an assurance that that will enable the police and prosecutors to get the top men—the big boys. So often, as the hon. Member for Sedgefield (Mr. Blair) said, legislation has been used to capture the carriers and the traffickers—the small people—while the big boys have seemed to get away with it. I hope that that change, and the fact that the courts

will gain powers to confiscate further proceeds which may come to light after the initial confiscation order has been granted, will enhance the probability of pursuing and taking the proceeds away from the big organisers of big crime.
In particular, I welcome the new offence created for failing to report knowledge or suspicion of drug money laundering gained in the course of a trade or profession and the other elements which bear on drug money laundering. The clearing banks have taken great strides in establishing methods of policing drug money laundering within their own banks and between themselves. I should like to be reassured that those banks can incorporate into their established procedures the rules which will apply under the Bill.
Will the Minister reassure the House about how the present law is being applied by other financial institutions such as building societies, stock markets, insurance companies and accountancy companies or partnerships? If there is any doubt about whether the present law is being applied sufficiently, I hope that the Bill will give added impetus to organisations involved in financial services to do better in future.
Under the terms of the Bill, certain funds to combat drug trafficking and extradition will be placed on a statutory basis. I wonder what that means. How much funding is involved and to what will it be applied? With regard to funding and organisation, I also wonder how the operation of the new law might be affected detrimentally by changes in the organisation, funding or operation of police forces in this country. That may be a slight tangent, but it is so pertinent to the application of the Bill that it would be good to have some reassurance from Home Office Ministers that nothing which might conceivably affect the organisation of our police forces will affect the efficacy of this good legislation.

Sir John Wheeler: My hon. Friend has raised an important issue which was covered in previous reports by the Select Committee on Home Affairs. Will he take into account the fact that this month marks the anniversary of the establishment of the national criminal intelligence service, which was designed to meet my hon. Friend's point? It was designed to provide for better investigation of serious and organised crimes—80 per cent. of its work now relates to drug-related crime—and, through that service, the regional crime squads and the drugs wings of those squads co-ordinate the work of local police forces. My hon. Friend may feel that that meets the concern that he has expressed.

Mr. Rathbone: My right hon. Friend the Member for Westminster, North (Sir J. Wheeler) has gone into greater detail in relation to the point that I was making. I hope that none of what he referred to will be jeopardised. Similarly, I hope that the European extension of that into Europol, which was a British Government initiative, will not be jeopardised and will lead to the application of the same methods of intelligence-gathering on a continent-wide basis that we have applied on a national basis in this country.
What plans do the Government have to establish even closer liaison in future with other European countries and, on a bilateral basis with countries elsewhere in the world, to persuade them to adopt legislation similar to this Bill, which falls so well within United Nations conventions,


within the Vienna convention and, in European terms, within European Community directives? Until other countries apply the same kind of laws that we have been developing in this country to control drug misuse and drug trafficking, much of our activity will unfortunately come to naught. I pay tribute to the Government's international initiatives in that sphere over the years. The British Government can, with justification, hold their head high with regard to the control of drug misuse.
However, the Bill has missed the opportunity to require confiscated moneys to be applied in order further to tackle drug misuse problems in this country. Moneys seized abroad through international co-operation can be used in this country for further funding of drug seizure and policing methods when foreign Governments pay that money to this country. Those moneys amount to a sizeable sum of £3 million or £4 million.
It is an anomaly, however that, at the end of 1991, the most recent year for which figures are available, some £35 million was available entirely within our own control, but the Treasury got its hands on that money—I am glad that my hon. Friend the Economic Secretary to the Treasury is on the Front Bench to hear this—and it was not used specifically to further the efforts of the police and their hard work in terms of containing this hideous problem.
My final point was touched on by the hon. Member for Sedgefield, and I believe that it should also be stressed from the Conservative Benches. The Bill is admirable and should be welcomed. Sadly, however, other parts of the Government are not marching to the same tune. In that regard, I mention specifically the Department of Health, which has unfortunately removed the ring fencing of funding for drug and alcohol treatment centres. They are in jeopardy, no matter what my colleagues or Ministers might say.
In addition, the Department for Education has done away with health education co-ordinators. They are perhaps the most important element of Government activity in tackling drug misuse because it is at that level—in schools and talking to young people—that we reduce the demand which fuels all the other problems of trafficking, money laundering and criminality associated with that which the Bill is designed to tackle. I commend my colleagues for introducing the Bill.

Mr. Donald Anderson: I commend the work of the hon. Member for Lewes (Mr. Rathbone) in this country and in various international forums in heightening the awareness of the House and of the public about drug abuse. I echo what he said about the very important point made by my hon. Friend the Member for Sedgefield (Mr. Blair), that we must see drug enforcement and other matters within the context of overall Government policy.
If we are to be concerned properly about drug money laundering and drug abuse, we must also consider prevention. On a right hand and left hand basis, I hope that those in government who are concerned with the criminal law will also consider what the Department of Health and the Department for Education are doing in terms of weakening the supports that prevent young people from entering drug abuse. We cannot consider one side of the problem without the other. In this area, and in other areas, my hon. Friend the Member for Sedgefield has

enunciated the proper principle of being tough on crime and the causes of crime. That same principle can be applied well to this matter.
I suppose that the first response of practitioners and members of the public to a Criminal Justice Bill is, "Oh, not again." There is not a lot of time for catching breath and perhaps consolidating. That is especially true in the light of experience with the Criminal Justice Act 1991. Many experienced magistrates are resigning over the question of the unit fines and a general unhappiness about the way in which prosecutions are hampered by the failure fully to take into account the antecedents of a defendant. Given the relatively small amount of parliamentary time which is at the disposal of the Home Office, it would have been ideal for the Government to use this existing vehicle. Clearly, mistakes were made in the 1991 Act. Would it not be possible, even now, for the Government to use the existing vehicle to remedy some of the deficiencies which have arisen as a result of the operation of the 1991 Act?
As a commentary on the lack of time of the Home Office, I say only in passing that the Home Secretary will be aware of the vexed question of Sunday trading, where the Government are seemingly resigned to allowing law breakers to continue their law breaking for at least another year and to do nothing about it. That is something which could equally be dealt with by the Government by adopting an existing vehicle—the Shops (Amendment) Bill which was introduced by my hon. Friend the Member for Ogmore (Mr. Powell). That is a suggestion which I proffer in good faith to a Government who, undoubtedly—especially after Maastricht—are looking for ways to cut down parliamentary time for Government legislation. My hon. Friend's Bill is a means so to do.
As the Home Secretary said, the Bill is complex and technical. It is to be welcomed in its broad thrust because it updates, closes loopholes and seeks to bring existing legislation into line with matters which have been revealed as a result of experience. The Bill is largely the result of expert discussion, whether at the European Community level, the Home Office working party level or the Law Commission level. The Bill has already been extensively covered in the other place.
Therefore, we are left with picking what is left on the bones, as it were, and drawing attention to some of the deficiencies. One of those deficiencies is the failure to amend the Prevention of Terrorism (Temporary Provisions) Act 1989 in accordance with the provisions of this Bill. I am glad that the Minister is taking that on board, albeit belatedly.
As my hon. Friend the Member for Sedgefield said, we can make no reasonable points about part I, which relates to jurisdiction. The point about the danger of double jeopardy needs to be tackled by the Government. Parts II and III, which relate to the confiscation of the proceeds of crime and money laundering, are more relevant. They raise the question of civil liberties and where one must draw the balance. All hon. Members recognise the scourge of the drug trade and the way in which so many innocent lives, especially among young people, are blighted by the activities of 'godfathers' who are frequently beyond the reach of jurisdiction. In our search for justice against those godfathers and the couriers, whether they be from Nigeria or wherever, we should not lose sight of basic civil liberties, the standard of proof and suspicion—not knowing and believing, as in section 22 of the Theft Act 1968. Those matters need to be examined carefully.
There is a feeling of unease about certain provisions in the Bill. Some people believe that the balance—as a result of the Government's zeal, understandably, successfully to prosecute more people—may be tilted too far and that some basic civil liberties may be overridden in the process. It is not necessary for me to cover the specific points of concern. I have no problem with putting the assets of the drug dealers in jeopardy for a further six years after conviction. That is proper. It is clear that many drug dealers are able to hide their assets by sophisticated methods. It is proper that a term be placed on that, and six years seems to be reasonable. Nor am I worried about the civil standard with regard to confiscation, although I wish that this was at the top of the civil standard of proof set out by way of guideline.
I am concerned about clause 13, relating to double sentence. There is a certain sense of unfairness that, although a person has served a sentence rather than the goods having been confiscated, the possibility of confiscation still stands. That is wrong in principle. I was not convinced by the explanation given in the other place. Perhaps the Minister can tell us whether there is a precedent in criminal law for such a draconian provision in clause 13.
I have already referred to the question of knowledge or suspicion under clause 16 and it is not necessary for me to dwell on that. I understand that the Minister will refer later to part IV, which relates to insider dealing. We understand the need to comply with an EC directive, which appears to be the motive behind the inclusion of part IV in the Bill. I simply ask about the extent to which Britain had a substantial say in the drafting of the various definitions. Several practitioners are concerned that, in our attempt to implement the directive, we have made less specific some of the terms which are used in our domestic legislation. The Minister will know the terms which are included. I wonder to what extent we have diluted what we thought was the proper practice as a result of the need to compromise at the EC level.
I refer to my earlier point that, clearly, the current provisions are not working adequately. I am a veteran of the discussions which resulted in the Companies Act 1981. At that time, the Government were wary of having any insider dealing provisions. They claimed that it was better to rely on self-regulation, although manifestly self-regulation was not working. Clearly, there were problems as a result of that self-regulation in obtaining evidence.
The position for the past five years—the source of the figures is column 748 in the Official Report of 13 January 1993—is that there were 30 prosecutions and only 13 convictions. If those who embark on prosecutions adopt the normal 50 per cent. rule—is there a more than 50 per cent. chance of succeeding in a prosecution?—clearly, they are failing. They are making judgments which have not been proved adequate in practice, and they are failing when more than half of the prosecutions on which they have embarked have failed.
Is it the view of the prosecuting authorities that the difficulties in obtaining prosecutions derive from a feeling on the part of juries that insider dealing is fair game and something which perhaps should not be within the ambit of the criminal law, or are there fundamental problems in terms of definition which prevent prosecutions from being

successful? Presumably there must be research into why the prosecutions are failing. After all, the motive behind part IV is to implement an EC directive and not necessarily to improve the quality of our domestic legislation.

Mr. Nelson: As the hon. Gentleman and the hon. Member for Sedgefield (Mr. Blair) have talked about numbers of cases, it might be helpful if I were to try to clarify the matter. I understand that 28 prosecutions have been brought and that there have been 17 convictions. Of the 43 people who were involved, 22 were found guilty. The rate of conviction is rather higher than the figure or figures that the hon. Gentleman quoted. In such cases it is difficult always to secure the information that is necessary to mount a conviction. That is why my right hon. and learned Friend the Home Secretary was so right to point to the deterrence aspects as well as the prospects of mounting a successful prosecution.
It is entirely proper that the Director of Public Prosecutions and the Secretary of State for Trade and Industry, who have the right to bring the cases that we are discussing, should be satisfied before, at public expense and in the light of all the other factors that are involved, such cases are mounted. The performance has been credible and along the lines of the average for fraud cases. The Bill's provisions should make the performance even more successful in future.

Mr. Anderson: If the rate of conviction is somewhat higher than that which the written answer suggests, it is still only just above the hurdle of the 50 per cent. rule. Given the expensive nature of these cases, that is something that the Government need carefully to examine.
We are talking about an amendment to our domestic law that perhaps the Government would not have wanted. It is an amendment which derives directly from our need to implement an EC directive. I say rather mischievously in passing that I hope that such provisions will be implemented fully and in a draconian way in Italy as well as in the United Kingdom.
There has been a series of Criminal Justice Bills, and the one before us is clearly to be welcomed. There are points of detail that need to be examined. We face the constant problem of catching up with modern, technical developments and others and responding to the sophistication of criminals. In so far as it goes, the Bill is welcome in that respect.

Mr. Bernard Jenkin: First, I declare an interest. I am a paid adviser of the Legal and General Group plc, which has interests in part IV of the Bill, both as a quoted company on the stock exchange and as an investment management business. I am pleased that I do not have to declare any other interest. Notably, I am not a lawyer. I rose to speak with some trepidation, however, before tangling with the able and qualified lawyers who have already involved themselves in the debate.
I shall commence by lamenting what is not in the Bill. I join my hon. Friend the Member for Leicestershire, North-West (Mr. Ashby), who in an intervention in the speech of my right hon. and learned Friend the Home Secretary lamented the fact that we are not dealing with the problem of sentencing by way of unit fines, which were introduced in the Criminal Justice Act 1991.
We are creating something of a nightmare for the 29,000 lay magistrates and there is a crisis of morale. In my constituency we are feeling the effects of the problem quite severely. The most offensive part of the 1991 Act has been described by Lord Justice Taylor as an "ill-fitting straitjacket" on the sentencing policies of individual courts. I shall detain the House for a short while by quoting from the leader which appeared in The Times on 23 March. Part of it reads:
The problems which have afflicted the Criminal Justice Act in its first six months illustrate the difference between sensible guidelines and rigid prescription. It is right that courts should be firmly directed in their sentencing. But the scales of justice cannot be reduced to an algorithm. The responsibility of magistrates to import local knowledge and expertise to the judicial process must be preserved. Rigidity and obscurity are no recipe for justice.
I am sure that my right hon. and learned Friend the Home Secretary has already taken those points on board.
I also lament the fact that we are not able to deal with juvenile offenders in our consideration of the Bill. I can vouch for the fact that juvenile offending is a major problem in my constituency. The local police could name the 20 or 30 juvenile offenders with whom they have to deal time and time again. It is clear that we must deal with the problem as quickly as possible. The difficulties experienced in reforming these offenders may be acute, but it is not fair on the victims of their crimes that they are allowed to roam the streets because the detention policies hitherto tried have not been successful.
Apart from those caveats, I give a broad welcome to the Bill. It is directed primarily to financial crime, which is every bit as heinous and damages the victims every bit as badly as ordinary crimes. We tend to become preoccupied, as I was when making my earlier comments, with crimes which have a direct effect on individuals in a visual or graphic way, but financial crime has its own victims and causes its own misery. I give a strong welcome to the practical alterations to the law which turn on matters of jurisdiction and the proceeds of criminal conduct. I strongly welcome the proposed improvements to the law on drug trafficking.
I wish to focus especially on part IV, which is concerned with insider dealing. My central concern is that there appears not to be a full understanding of how institutions and quoted companies seek to smooth the market, to avoid volatility in the stock market, to give confidence to the market. I wish to focus on how the market works now and the threat that the Bill might present to the way in which the market works currently.
The concerns which I intend to articulate have been raised by a wide range of people and organisations. I shall refer briefly to but a few. First, there is the Investor Relations Society. There is the Hundred Group of Finance Directors, which is a club for the finance directors of the top 100 quoted companies in the United Kingdom. The group states:
the ambiguities implicit in the drafting of the Bill … are so serious that it appears to us that the legislation will hinder legitimate business activities and market practices.
The Association of British Insurers wrote to me as follows:
We are particularly concerned, as major in vesting institutions, that the provisions will unduly inhibit shareholder-company communications and restrict the ability of companies to raise capital.
The CBI states that it
believes that the current provisions of the Bill, if unamended, will seriously hinder the development of open lines of communication between companies and investors.

The Institute of Directors has also written to me. It states:
The IOD's Law Committee, whose membership comprises a wide range of business, professional and academic expertise, was unanimous that the Bill, as drafted, was, in spite of the Treasury's clearly expressed intention to the contrary, capable of casting doubt on the legality of directors effecting normal commercial corporate transactions. It could, accordingly, create substantial difficulty, uncertainty and unfair exposure to criminal penalties for directors of industrial and commercial companies.
The British Bankers Association has also written to me, as have many other organisations which are respected by the Government, I believe, and whose opinions we should take account of when considering these matters.
A survey conducted by a firm of solicitors—Fishburn, Hedges, Boys and Williams—last September among 50 investing institutions found that 62 per cent. of fund managers believed that the new legislation would damage the quality of their service to clients by stemming the flow of information and hampering their ability to analyse companies. Furthermore, it was clear that institutions think that the Government's proposals will create more problems than they will solve. Far from cracking down on insider dealing, they will restrict the communication on which all investors rely.
The fundamental flaw in the Bill is an apparent lack of understanding of how the market operates. In common, I am sure, with virtually all right hon. and hon. Members, I am in favour of strong and clear insider dealing legislation. As my right hon. Friend the Secretary of State said, such legislation is necessary for the market to operate effectively and so that investors may have confidence that the market reflects the true value of quoted companies.
There are two sides to the operation of the market. There are the stockbrokers on the sell side, who seek to sell securities to investors, and there are institutional and individual investors on the buy side. Institutions account for the major part of the buy side, with individual investors forming a very small proportion of today's market.
There are perhaps a dozen standard forms of communication between quoted companies and the market. I shall list the six main ones. Published and half-year results are price-sensitive information. When they are made known to the market, they are made known publicly and there is no ambiguity as to their status. Other information will be given to brokers in a standard form and is counted as publicly available information.
Specific announcements might be made at press conferences. If the market is informed by brokers that profits have been forecast as X but that the company is fully aware that profits will be half X, the company may issue a profits warning, to make clear to the market what will be its likely profits, so that the market is fully informed and can effectively reflect that information in the company's share price.
The less public channels of information are more under threat from the Bill. I refer to meetings with buy-side analysts at which brokers' analysts are met on a one-to-one basis or in groups in order better to inform them of a company's nature and position. The purpose is to divulge not price-sensitive or inside information but facts which could improve the brokers' understanding of the company, which will necessarily affect their view of it.
There are also one-to-one presentations to large shareholders. This is an essential and growing practice in the City. They enable the City to gain a better understanding of British industry and vice versa—


something towards which Governments have been working for years. It is an important part of the communication process between industry and the City. There is also communication with small shareholders.
The last three practices relate not to public information but to legitimate information. If, for example, a company's published results prove to be very bad, investors and intermediate institutions are entitled to know of the problem which caused the fall in profits and the action that the company is taking to put the matter right. Such information will help to inform the share price. That is about giving the company the opportunity to explain its stance on key issues.
The objective of a responsible quoted company is to optimise its share price. I do not mean by that that it should try to bolster its share price at every opportunity because that would not be conducive to an optimum share price. Companies which attempt to bolster their share price at every opportunity tend to receive a low rating in the market, because the market does not necessarily attach the same importance to everything said by such a company as it would to a company which takes more care over the way it communicates with its shareholders.
The optimum share price is the best share price in view of all germane information and the state of the company. That means giving investors confidence that the price in the market is a fair reflection of the company's real value—that the brokers' profit forecasts are not wildly out. That avoids shock movement in share prices, which provides the biggest opportunities for insider dealers to make a quick and illegal profit.

Mr. Peter Ainsworth: Does my hon. Friend agree that meetings of the kind that he described and the practices that he mentioned are vital to the smooth running of the capital markets and to the provision of capital to publicly quoted companies? It is most important that shareholders and corporate management should know and understand each other and should talk to each other regularly on a basis of confidence.

Mr. Jenkin: My hon. Friend is right to draw attention to the ability of companies to raise additional capital. They can do that only if there is general confidence in the value of their share price and if that information in the public domain is accurate and up to date. If brokers had information completely different from that in the public domain, the market could not operate effectively. If brokers were happy to behave in such a way, confidence in a particular stock would be seriously damaged, which ultimately would be in no one's interest. My hon. Friend highlights the important point that there is a different nut which will be caught by the sledgehammer nature of the Bill's wider definitions.
The process of conveying information, maintaining investors' confidence and ensuring a realistic share price must be safeguarded. The potential for damage could lead to more volatile prices, which would be bad for the confidence of investors and would lead to more surprises entering the public domain more frequently. That would increase the likelihood of sharp share price movements, which would be to the advantage only of those who dip in

and out of the market for short-term gain. It would not be to the advantage of long-term investors seeking to secure the funds of policyholders or of the companies themselves.

Mr. Nelson: It is not my intention to keep bobbing up and down throughout the debate but as this is the part of the Bill with which I am most concerned, perhaps my hon. Friend will allow me to comment.
Under present legislation, unpublished price-sensitive information cannot be disclosed at such meetings—just as in the future information which has not been made public, which is specific and precise, and which is likely to have a significant effect on the share price, cannot be disclosed at such meetings. I share with my hon. Friend his view of the importance of meetings between companies and their institutional investors and of occasional meetings with analysts. Nothing in the Bill should be used to interrupt those important relations and established means of analysts going about their business—and it is certainly not the Government's intention that any of the Bill's provisions should be used in that way.

Mr. Jenkin: I am extremely grateful to my hon. Friend for clarifying so clearly the Government's intention, which is as I have always understood it. I am sure that most investing institutions and organisations to whose representatives I have spoken also believe that to be the Government's intention.
One problem, which is more a Committee matter than a Second Reading matter, is that the Bill will make it illegal for someone with inside information to encourage another person to deal in shares even if that other person is not told the information. That means that a director could, simply by having a meeting with a broker, without passing over inside information, make the broker an insider, causing the broker to go off-market, perhaps until the next results are published. In view of my hon. Friend's assurances, I am sure that that matter can be clarified in Committee.
I was greatly encouraged by the fact that my right hon. Friend the Home Secretary said that amendments to clarify the issue—perhaps clarification is all that is needed—will be brought forward in Committee. With that caveat, therefore, I commend the Bill to the House.

Mr. Robert Maclennan: The Bill's aim—to improve the ability of the criminal justice system to tackle white collar financial crime, including fraud, money laundering and insider dealing—is something to which all hon. Members would subscribe.
The hon. Member for Colchester, North (Mr. Jenkin) has performed a valuable service in highlighting some of the concerns that have been widely expressed about whether the Bill, no doubt inadvertently, will catch desirable activities and increase uncertainties in a way that does nothing to advance its purpose of diminishing white collar crime.
It is not entirely satisfactory to leave such matters to be dealt with in Committee. That may be the conventional way in which Parliament deals with them, but we have a procedure—a pre-legislative Committee procedure which would have been apt to take on board exactly the kind of points with which the hon. Gentleman so eloquently dealt.
The hon. Gentleman was right to list the number of institutions and groups of people who have expressed


concern. Parliament would have been helped if it had had an opportunity to hear those concerns expressed in a way that could have been provided if the matter had been considered at the right time.
I say that particularly because a considerable number of complaints have been made about the consultative process in the Bill's preparation. I drew that to the attention of the Secretary of State in the course of his opening speech, so I do not wish to labour the point now. However, the consultation before the Bill was published was not as extensive as it should have been.
It would be a good idea for the Home Office to take on board the strictures of the Hansard Society for Parliamentary Government's commission on the legislative process—a body on which I served along with Mr. Michael Latham, who used to be a distinguished Member of the House, and the hon. Member for Great Grimsby (Mr. Mitchell)—which drew attention to the widespread dissatisfaction with the consultative procedures, particularly on technical Bills, in order to avoid the kind of difficulties of which we have heard. That is not a party point.
However, the purpose of today's debate is not to draw attention to those concerns which will no doubt be returned to in Committee, but rather to deal with the broad principles behind the Bill. I think that the hon. Member for Colchester, North and others would agree that, whatever their concerns may be, and however abstruse and complex white collar crimes may be, such crimes are real and damaging. They are damaging to our marketing institutions and to individuals. The Maxwell pensioners and those who invested in Barlow Clowes know that they were not victimless crimes.
Many hon. Members are personally aware of the horrific expansion in drug trafficking and its appalling consequences. I shall not repeat matters on which the hon. Member for Sedgefield (Mr. Blair) touched beyond reiterating my concern, and that of my right hon. and hon. Friends, aboul the continuing increase in drug trafficking in Britain. Notwithstanding evidence of the increasing success of Customs and Excise in pulling in drugs—I understand that the value of drugs seized in 1980 was some 10 million and in the latest recorded year for which I have figures, 1991, the street value was £200 million—as the hon. Member for Sedgefield rightly said, we do not know what percentage of the total trade that constitutes. If, as has been alleged, it is about 10 per cent. of that trade, we still have an horrifically large problem with which to deal and so must take whatever measures we can to reduce the profitability of the venture, and that is clearly what the Bill intends.
Like the hon. Member for Colchester, North, I want to deal more with the question of the effectiveness of white collar financial crimes—the part of the Bill that covers insider dealing—and my general concern about our apparent difficulties in tackling complex fraud in Britain. We were helpfully given the precise and up-to-date figures by the Economic Secretary in an intervention and they show that, of the cases referred, a small proportion have resulted in convictions.
I made the immediate concession to the Home Secretary that the deterrent effect of our existing law on insider dealing in particular is incalculable and no doubt great. But it is a matter of concern that we find it so difficult to make charges stick. I want later to make some suggestions about how we might improve that position.
In general, my right hon. and hon. Friends welcome moves to provide the criminal justice system with the means to apprehend and convict those who commit such offences, but we have some doubts about whether the Bill will do a great deal to enhance the effectiveness of our attack on the problems.
I welcome the proposals on extra-territorial jurisdiction. By way of an anecdotal aside, I can tell the House that as long ago as 1967 I introduced a private Member's Bill, the Toyko Convention Bill, which was enacted. It was designed to give extra-territorial jurisdiction to our courts for crimes committed on board aircraft to take account of changing technolgy and the greater frequency with which crimes were being committed on aircraft over which no one had jurisdiction. That principle must obviously be extended so that, as technology and trading across screens develops, we can apply new criminal sanctions. There will be many changes, and frequent Criminal Justice Bills will inevitably be needed to take account of such developments.
I suspect that we shall not have to deal with new technology or a change in perception of the seriousness of the offence of insider dealing. As long ago as the early 1970s, the Takeover Panel outlawed insider dealing for takeovers in its non-statutory code. A number of attempts have been made since then to provide a statutory basis for the effective treatment of such offences by our courts. However, the volume of legislation on the subject is testimony to the ineffectiveness of each piece of legislation that we have introduced, not to the development of technology.
It is appropriate to draw to the Government's attention the Bar Council's thinking on the broad issue of fraud trials. I well remember a debate in the House a few years ago on the report of the Roskill commission. I think that there were 12 participants in the debate, almost all of whom—if my memory serves me right—were lawyers. Eleven of them spoke against the Government's proposal that serious fraud trials should proceed without the benefit of a jury, using instead specialist judges with specialist assessors. In the face of that overwhelming opposition to the principle of the Roskill commission's main recommendation, the Government did not proceed with the proposal, and they were right not to do so.
The proposal has been referred to from time to time and perhaps it will be considered again by the Royal Commission on Criminal Justice. Nothing that I have heard has suggested to me that the House was wrong then to recommend that we stick with jury trials in complex fraud cases. However, the Bar Council is right to advocate certain procedural changes in such cases—not least cases of alleged insider dealing covered by the Bill—that would enable the system to operate more effectively and fairly, and help juries to tackle the problems of dealing with complex fraud. The Bar Council's working group identified the central problem as the complexity of the cases relating to offences such as those covered by the Bill. The group stated that the complexity resulted from the increasingly sophisticated nature of the crimes that take place in the context of the global. electronic financial marketplace.
The Bill does not deal with such problems, which is a pity, as it provided an opportunity to do so. The Minister of State, Lord Ferrers, dealt with some of the anxieties mentioned earlier, but he did not make any proposals to deal with the procedural difficulties. There are no easy or


quick solutions, but there are ways to assist juries in cases such as the Blue Arrow trial. In that trial, the jury members were expected to wade through a mass of minutiae in pursuit of important information. The Court of Appeal ultimately ruled that the case had become unmanageable, and consequently none of the convictions could be said to be safe.
One way of helping the jury to stay on top of the case would be to introduce special court procedures to clarify the issues and identify the relevant information before, and perhaps even during, a trial. Those procedures would be in addition to, but not instead of, normal trial procedures. There is no need to create a professional or semiprofessional tribunal without a jury, only a need to find ways of managing the information more efficiently.
It would be interesting to hear the Government's view on what Lord Alexander of Weedon advocated in his speech on Second Reading, to which the hon. Member for Sedgefield (Mr. Blair) referred. It seems that some of 'the cases that the stock exchange drew to the attention of the Department of Trade and Industry might have been susceptible to examination, and proceedings might have been initiated that would have resulted in the disgorging of illegally obtained profits. Some compensation and redress might have been given to some of the victims of improper white collar crimes if the proposals advocated by Lord Alexander were adopted. Therefore, it would be of interest to know the Government's thoughts. I cannot imagine that it is a matter on which one would have a doctrinal view.
There is scope for extending the role of the judge in requiring coherent and relevant case statements from the defence, and for encouraging more extensive agreement in complex fraud cases between the defence and prosecution over the facts by means of a timetable procedure. That would enable the separate issues of the case to be dealt with in a rational and efficient manner. It would be much less confusing for the jury and would consume less court time. The jury could be presented with the relevant documents and summaries as each stage of the trial occurred rather than at the beginning of the trial in accordance with the timetable that had been drawn up. The presentation and summing up of the cases for the prosecution and defence should also be accompanied by written summaries to be used by the jury.
I make those suggestions tentatively, and they are not intended as a panacea for the ills of our criminal justice system in relation to white collar crime. However, they are intended to address a problem that the Bill touches on but to which it does not adequately face up. They would provide a valuable step towards giving courts the means by which to try such cases effectively, fairly and efficiently. That is necessary if we are to deter transgressions by those who could bring our markets into disrepute and cause great damage to our commerce and to the profits that the City brings to our country.
Without such a step, I fear that the Bill may be no more effective than some of its predecessors in eliminating the profitability of large-scale white collar crime. I hope that we shall not need yet another Bill in a few years to tackle these matters. Amendments to the criminal law procedure along the lines that I have suggested would give existing law a better chance to work.

Mr. Edward Garnier: This is the third time in the past year that I have had the pleasure of following the hon. Member for Caithness and Sutherland (Mr. Maclennan). As on those occasions, he has made a considered contribution. It is also a pleasure to participate in a debate that has been largely uncontroversial. All hon. Members seem to support the thrust of the Bill. The Tokyo Conventions Act has been mentioned. I assure the hon. Member for Caithness and Sutherland that in the Market Harborough Conservative club we talk of little else.
I shall concentrate on part II of the Bill and especially on the clauses dealing with the burden of proof and related matters. Clause 7(1) amends section 1(1) of the Drug Trafficking Offences Act 1986. The amendment will be such that the requirement of the court to determine whether a convicted person has benefited from drug trafficking is no longer mandatory. That will allow the determination to be made at the request of the prosecutor or at the behest of the court on the court's motion.
That provision will dispense with courts wasting time and the money of the police and prosecution service making determinations in cases where the amount of the benefit is so small as to be not worth the investigation. A better use of police and court resources is to be commended, not least at a time when the Government's resources are limited and when we are concerned about the amount being spent on legal aid.
Clause 7(2) inserts a new subsection in the 1986 Act, subsection (7A), which states:
The standard of proof required to determine …
(a) whethr a person has benefited from drug trafficking, or
(b) the amount to be recovered …
shall be that applicable in civil proceedings.
From now on it is clear that the trial judge making the determination will work on the balance of probabilities at that stage of the proceedings. He will have to be satisfied that an allegation or fact is more likely than not.
I understand that a judge is currently entitled to make assumptions under section 2(2) and (3) of the 1986 Act when arriving at a decision. No standard of proof arises when the judge is deciding whether the assumption should be made. When the assumption is made, the burden falls on the defendant to rebut it on the civil standard. I understand that that follows from the judgment of the Court of Appeal in Crown v. Redbourne to which the hon. Member for Sedgefield (Mr. Blair) referred.
Hand in hand with those amendments under clause 7 is clause 9 which requires the court to make the assumptions about property and expenditure which are set out in the Drug Trafficking Offences Act unless they are shown to be incorrect in the defendant's case or the court is satisfied that there would be a serious risk of injustice if they were made. If the court decides not to make the assumptions, it must state its reasons. It is an admirable advance that a court should be required by statute to give reasons for reaching a conclusion.
Clause 9 amends section 2 of the 1986 Act. Section 2(2) of that Act states what the court "may" do to determine whether a defendant has benefited from drug trafficking. The word "may" is replaced by "shall". Clause 9 inserts at the end of subsection (2):
The court shall not make any required assumption if—
(a) that assumption is shown to be incorrect in the defendant's case …".


The required assumptions are set out in subsection (3) of the 1986 Act, but I shall not rehearse them. Despite the concerns of those who spoke against the 1986 Act that these were draconian measures, it now seems that the hon. Member for Sedgefield has recognised their value. I am sure that criminal practitioners, of whom I am not one, will also recognise the value of the Bill's amendments to the 1986 Act.
Clause 8 adds to section 1 of the 1986 Act a provision allowing the determining court to postpone its investigation for up to six months until relevant information has been obtained. That application can be made by the prosecution or by the defence or by the court on its own motion. It deals with the problem which can arise under section 1 of the 1986 Act when no confiscation order is made at the original determination on the mistaken assumption that the defendant had no realisable assets but when some are subsequently discovered. I understand that previously a court had only 28 days to vary its decision. Now it has a considerably longer time in which to right that injustice.
Clause 12 allows the court to vary an order to take account of increased values of assets. That is an especially welcome addition to the criminal law. It would be manifestly unjust if someone convicted of drug trafficking were able to benefit from the increase in house prices, Iand values or the value of any other proceeds that he had acquired as a result of drug trafficking but which were not available to be seized by the court at the time of the determination. I welcome that aspect of the Bill.
Clause 16 continues the fight against drug trafficking and those who benefit from it by making it an offence knowingly to acquire, possess or use another's proceeds from drug trafficking. It is easy to build up an empire and pass it on to one's friends and relations who will benefit from the proceeds of illegal acts. Anyone who knowingly benefits from such a gift or who acquires, possesses or uses another's proceeds will be liable on indictment to a sentence of 14 years' imprisonment. That also underlines the determination of the House and the Government to get to the root of drug trafficking—to hit the drug barons and their friends in their pockets.
I also commend clause 10, which tightens the pleading procedure on determination. The court will be enabled to inform the prosecutor that he must set out his statement of case. The defendant must respond to it within a given time. That procedure will save time, eliminate unnecessary controversy and save money, which is particularly short at this time.
The Bill is a further arrow in our armoury in the war against drugs. We already have the Misuse of Drugs Act 1971, the Criminal Justice (Scotland) Act 1987, which contains similar confiscatory powers in regard to Scotland, and the Criminal Justice (International Co-operation) Act 1990, which contains measures designed to facilitate the task of detecting drug traffickers and confiscating proceeds. It creates the offence of manufacturing or supplying substances while knowing or suspecting that they are to be used in the unlawful production of controlled drugs. The Bill, which I hope will shortly become an Act, adds to that armoury.
As my right hon. Friend the Member for Westminster, North (Sir J. Wheeler) says, we have the valuable work of the drug liaison officers abroad, with their intelligence, which is vital if all this is to work.
Given the lateness of the hour and the number of hon. Members who wish to speak, I will conclude my remarks. I invite the House to pass the Bill as soon as possible, not only because it is an earnest of our desire to stamp out the blight of drug dealing in our society, but because it is what the people of this country require us to do as swiftly as possible.

Mr. Mike O'Brien: The doubling of crime since 1979 and the increased pressure on the police and the courts mean that the criminal law needs to be strengthened. Therefore, in broad terms, the Bill is welcome.
Drug use is obviously a major cause of crime. Those who traffic in drugs and create a demand for the product are as responsible for the muggings, burglaries and deaths caused by drug users seeking money for their next fix, as the drug users themselves. Many criminals would not offend, but for the need to pay the pusher and the trafficker who supply the drugs. It is necessary to have tough and effective laws on drug trafficking and on the laundering of the proceeds of crime. The Bill goes some way towards that. The greater powers that it gives the courts are, in many ways, justified because of the size of the threat confronting us.
I want to deal not particularly with drug trafficking but with insider dealing, although some of the points that I raise will be relevant to drug trafficking.
The statistics on the success or otherwise of prosecutions in insider dealing cases show how difficult it is to secure a conviction. In the peak year of 1989–90, 10 cases were taken to the courts, involving the prosecution of 14 defendants, four convictions and nine acquittals. I assume that the Fisher case, the Coren and Greenwood case and the Guinness case account for some of those, although not all.
The statistics were disputed by the Economic Secretary to the Treasury. The statistics provided by the House of Commons Library suggest—and I note what the hon. Gentleman said—that until 13 January 1993, of the 104 cases reported by the stock exchange to the DTI, 21 were prosecuted, involving a total of 33 individuals and resulting in 16 convictions. That suggests that the complexity of the law, coupled with the complexity of the issues involved, makes it very difficult for those accused of insider dealing to be convicted.
In the late 1980s, I was involved in an insider dealing case as a defence lawyer. In that case two acquittals were secured. I noted the complexity and amount of information with which we had to deal. The evidence took over a year to assemble, and weeks to read and analyse. Meetings with counsels were complex and virtually interminable.

Mr. Alistair Darling: And expensive.

Mr. O'Brien: Yes, they were certainly expensive.
In that case, the defence succeeded on a legal submission at the start of the trial. We had a whole series of legal points in the case which highlighted what we felt to be the inadequate way in which the legislation was drafted and its lack of clarity. I am sure that the defendants would have been aquitted in any event, but the Act was clearly lacking.
The Bill makes a number of welcome changes, but I fear that it does not take sufficient account of the need to clarify insider dealing legislation, and that we may need to revisit this area again in the near future.
The need to clarify both the way in which evidence is presented to juries and the legislation itself is very important. Unfortunately, I do not think that the Bill will do the trick.
One of the criticisms of the Bill, both in another place and by my hon. Friend the Member for Swansea, East (Mr. Anderson), was that the legislation shifts the burden of proof in particular areas. It is an important criticism, and it is right that burdens should not be unnecessarily placed upon defendants. However, it is also important that cases are decided fairly, and the requirement for a fair and just trial means that a jury should understand the process of the trial and the relevant factors involved in making a finding of guilt or innocence. My concern is that cases of insider dealing are too complex and, where they are linked to factual and documentary material which is also complex, the job of a jury in such cases is extremely difficult.
There is a proposal from some sources of replacing trial by jury with trial by a judge and assessors for particularly complex cases involving dishonest dealings. I am reluctant to go down that route because it is a slippery slope and undermines the right of an individual to trial by jury in criminal cases; but, if we are successfully to try cases by jury, it is essential to simplify the number of issues involved, which requires the use of legal presumptions such as those in the Bill.
Although such presumptions may shift the burden of proof towards the defendant, they can have merit in these particular types of case. For example, under clause 37 the defendant must show that he did not expect the receiver of the information to deal. This replaces the previous and inadequate legislation which required proof of knowledge of the intention to deal, which was sometimes difficult to prove. Although in the Bill there appears to be some element of "guilty until proved innocent"—or at least proved innocent on the balance of the argument—these provisions will in many cases lead, because of the simplification of the trial process for the jury, to a fairer and more just verdict. They simplify the process and, by and large, do not place unnecessary burdens upon defendants.
One area that the Bill does not cover is the removal of the right of silence in insider dealing cases. That was part of earlier legislation. Having sat through two days of interviews conducted under those rules, and looking at the convictions resulting from the interviews, I would say that hopes suggested by the police and by some Conservative Members that removing the right to silence in other types of case might improve the rate of conviction may not be justified, particularly in complex cases such as insider dealing.
I have grave doubts that the interviews take place in a proper manner. Certainly, my experience was that documents of very considerable complexity, which were extremely difficult to follow, were presented to a defendant who was asked to deal with questions relating to share dealings which had taken place two years before. He had had no opportunity to go through those documents. If we

are to deny the right of silence to defendants in complex cases, advance notice of areas of questioning and documentation should always be given. I hope that the Minister will look at that issue when the Bill is considered in Committee and that those who seek to undermine the right to silence will weigh in the balance the view that the proposal may not achieve its aim and could lead to additional injustice.
My main regret relates to what the Bill does not do rather than to what it does do. It provided the chance to undo the damage done by the Criminal Justice Act 1991. It is clear that insider dealing and cases involving drug trafficking will be affected by the sentencing restrictions imposed by sections 1(2)(a) and 29. They are cases which typically may have multiple count indictments or sample count indictments. It seems to me that the legislation that needs to be dealt with today is the Criminal Justice Act 1991. In its failure to do that, the Bill is massively inadequate.
When the 1991 Act was passed, the Government made it clear that the purpose of that measure was to reduce the number of people in prison. Its effect, however, is that persistent offenders with lots of previous convictions find that the court is restricted in its ability to take their record into account when sentencing. Some persistent offenders therefore get away with offences for which they should go to prison. It is frustrating for police officers and the public to see criminals arrested and brought before the courts and then to find that the courts are forced by the Criminal Justice Act 1991 to let them off.
Due to the enactment of that legislation the Government's law and order policy has lost all credibility; crime has doubled during their period of office and the 1991 Act is among the most ludicrous pieces of legislation ever to hit the statute book. By means of that Act, the Conservatives have added to their long list of citizens charters the citizens charter for criminals. The Act gives criminals more rights than they have ever had before and makes their lives easier than they have ever been before.
I welcome to some extent what the Home Secretary said about looking again at the 1991 Act, but that will take time, during which criminals who deserve to go to prison will not be sent to prison. While the Home Secretary consults, debates and prevaricates, other victims will suffer. There needs to be a sense of urgency about dealing with the Criminal Justice Act 1991. I hope shortly to put before the House of Commons a ten-minute Bill on the issue, which I trust that the Home Secretary and the Conservative party will be able to support.
I welcome, in broad terms, what the Bill does. As the Home Secretary said, it is right that it should be considered in detail in Committee so that the problems caused by its predecessor can be avoided. I am sure that we shall all be most vociferous in tabling the amendments that we think are necessary.

Mr. Peter Ainsworth: It is true that the Bill is unlikely to make headline news in the popular press. My right hon. and learned Friend the Home Secretary made that clear in his opening remarks. None the less, it is a most important Bill, for it provides a variety of additional safeguards against white collar crime. There is no qualitative difference between this type of crime and any other. It is absolutely right that we should be


assiduous in tracking down and punishing criminals who may wear white collars and sit in offices but who are, none the less, common criminals. Therefore, I particularly welcome the provisions of the Bill which make life significantly tougher for those who engage in serious international fraud, money laundering and its attendant terrorist associations and, of course, the evil practice of drug trafficking.
In common with other hon. Members, I intend to focus on part IV, which deals with insider dealing. I ought immediately to declare an interest. I began my professional career as an investment analyst in the City. Subsequently, I moved into corporate finance with S. G. Warburg Group plc, for which I act as a paid consultant. I am also a non-executive director of a public company.
Insider dealing has been famously described as a victimless crime, but in my view it is nothing of the kind. Insider dealing, put simply, is a form of cheating. One set of victims, therefore, consists of those who are cheated upon. By implication, these are other shareholders and other market professionals; it is widely accepted that larger and more active City institutions—for example, those handling large pension portfolios—are likely to suffer the most. But the other principal victim of insider dealing is the City itself. If cheating were to become widespread, the market would quickly fall into disrepute, and confidence in London, as one of the world's major financial centres, would suffer.
I hope that my hon. Friend the Economic Secretary is in no doubt about the importance that the City as a whole attaches to his efforts to make insider dealing legislation more effective. I am sure that he has the support of the City and the House in those efforts. But for legislation to be effective, it must first be absolutely clear. As the workings of the existing laws regulating the financial markets have from time to time in practice suggested, we are dealing with an extremely complex set of issues that do not readily lend themselves to legislation. There is a need to proceed with very great caution if the ability of the City to continue with its proper function of transmitting important information to investors and the public is not to be impaired.
Reference has already been made in the debate to the fact that during the Second Reading debate of the Bill in another place considerable concern was expressed that no final decision should be taken as to the detailed contents of the Bill without the fullest possible consultation with the City institutions and investment banks, upon whose daily business it impinges. It is a source of great encouragement that such consultation has now taken place. Here I differ from the hon. Member for Caithness and Sutherland (Mr. Maclennan).
I know that my hon. Friend the Economic Secretary has given full consideration to the large number of detailed points that have arisen from the consultation that has taken place since last autumn and from the consultation that continues to take place. I echo the view of my right hon. and learned Friend the Home Secretary that one of the major improvements that has taken place since last autumn is that the word "tippee" has not found a permanent place in the text of the Bill. I only hope that it was removed in time for it not to have found a permanent place in the English language. Perhaps I should not have mentioned it.
As the Bill stands today, a number of outstanding concerns remain. I do not intend, the House will be

relieved to hear, to list all of them this evening. The proper place for their consideration will be in Committee when I hope that my hon. Friend the Economic Secretary will consider carefully ways in which the present wording of the legislation can be clarified. Only this afternoon my right hon. and learned Friend made it clear that he is ready to look carefully at suitable amendments that may be tabled to deal with these concerns. I was also glad to hear him say that he himself intended to table some amendments. He may be assured that the progress of such amendments will be studied with the greatest of care and attention by those who carry on legitimate securities business in the City.
Repeated assurances have been given that there is no intention, by means of the Bill, to make illegal business practices that currently are legitimate. My right hon. and learned Friend reiterated that point clearly today, as did my hon. Friend the Economic Secretary. I very much welcome what they said. I do not for a minute doubt that they mean what they say, but the trouble is that those reassurances are not yet reflected in the Bill. As it is drafted, there is a distinct risk that some of the provisions in part IV will have precisely the effect of creating uncertainty over the legitimacy of currently accepted practices. That is perhaps mainly because a lack of clarity will make it too risky for present practices to continue.
Hon. Members have referred to the deterrent effect of the present insider dealing legislation. This, I believe, is very real. Reputable City institutions and financial service organisations are understandably most anxious to avoid any breach of the law, and their concern to be in no doubt about how the law will work, stems, perhaps, from that very anxiety.
I should like to highlight three key areas in which there appear to be particular problems. The first relates to stock market investment analysts—a subject that is very close to my heart. My hon. Friend the Minister will know that it is the role of analysts to obtain through research information about companies and sectors that can be used, usually in in-house publications, to provide fund managers with a basis for taking investment decisions. The key point it issue, which has been referred to in the debate, is that, to avoid prejudice to the role of analysts, it would be most helpful if my hon. Friend the Minister reconsidered the words "made public" in clause 33, which are somewhat unclear.
The issue has been widely discussed, but it is worth noting that the recital to the European Community directive, which the Bill implements, uses the words "publicly available", which is rather clearer and which seems to offer a preferable alternative with less risk of misinterpretation. It is an alternative favoured by the City, by the many organisations that were mentioned by my hon. Friend the Member for Colchester, North (Mr. Jenkin), by the British Merchant Banking and Securities Houses Association and, perhaps most important, by the finance directors of public companies, who liaise with investment analysts.
Fund managers are not always required to pay close attention to all analysts—indeed, in my experience, the views of a number of analysts are regarded as a counter-indicator of what is likely to occur—but the reputation of a few analysts in certain sectors is such that their views are capable of moving the market in relevant shares. It is necessary, therefore, for the Bill to make it


absolutely clear that an influential analyst does not become an insider by virtue of the fact that he or she has reached a conclusion about the merits of a share.
Under the Bill, it appears that, if an analyst is fortunate enough to have such a high reputation that the disclosure of his or her views on a share might move the market, because those views are price-sensitive and have not been made public the analyst would not be allowed to express those views to a client, if to do so would encourage the client to deal in a share. I am sure that my hon. Friend the Economic Secretary would not want such a situation to develop.
There is a real danger that the well-intentioned measures in part IV could so impede the flow of reasonable information between companies, about which my hon. Friend the Member for Colchester, North spoke so eloquently, that they could reverse the trend to corporate glasnost, which has been a feature of recent years and which has led to a freeing up of information on which to base investment decisions. We surely do not wish to encourage a return to the corporate secrecy of the bad old days, when one had to be a member of the chairman's club or golf club to know anything meaningful about what was going on in a company.
I hope that my hon. Friend the Minister will reconsider the way in which the Bill might apply to vendor placings and secondary share underwritings. This is technical stuff, but it is important to the smooth functioning of the City and the capital markets. It is unclear whether normal, perfectly legitimate practices associated with secondary underwritings and vendor placings will continue to be permitted under the Bill. Vendor placings are a frequently used method of financing acquisitions, and a good example of a secondary underwriting that might be close to my hon. Friend's heart is the forthcoming disposal by the Government of a further tranche of shares in British Telecom. It would be most unfortunate, to say the least, if there were any uncertainty about the legitimacy of the means by which this disposal or any other secondary underwriting might logically and appropriately take place.
I understand that it has been suggested during the consultations that vendor and secondary placings would be protected by the defence in clause 32(2) that persons taking part would not be intending to secure a profit by reason of the fact that the securities are price-affected, but as such people are inevitably engaged in business with a view to securing a profit, and as the nature of many of the transactions in question will be likely to affect the price, this does not seem to be a particularly robust defence. I therefore hope that my hon. Friend the Minister will be able to introduce a more precise and dependable protection for those who carry out a role that is integral to the raising of corporate capital.

Mr. Nelson: I assure my hon. Friend that I shall consider most carefully the thoughtful points that he has made, which is the advantage of the Committee stage. I draw his attention to part II of schedule 2, which provides exemptions for market makers, market information and price stabilisation, all of which are important aspects of what the professionals do in the market and should offer an exemption that measures up to many of the demands that were made in the consultation period. I shall carefully consider how much further the Government can go to

provide further reassurances that do not drive a coach and horses through the intentions of the directive or the Bill, but I hope that my hon. Friend will acknowledge that we have tried to go some way to meeting the points he has made.

Mr. Ainsworth: I am grateful to my hon. Friend for his remarks. I am aware of the exemptions to which he refers. I know that all involved are grateful that it has been possible to incorporate them in the Bill and I welcome him saying that he will carefully consider the points that I have been making.
My third and final point concerns the way in which the Bill extends the definition of inside information beyond individual companies to cover groups of companies engaged in similar or competing activities. I understand the problem that the Bill is intended to tackle, but I was not wholly convinced by an example that was provided last September by a Treasury spokesman, who said:
If someone discovered that a company had closed down and then sold the shares of that company's competitor that would be insider dealing.
Insider dealing it might be, but it is possible to argue that it would be an extremely bad investment decision as well.
Perhaps I might venture, for future reference, an alternative example of the problem. If somebody learned that a company was shortly to be bid for and on the basis of that inside information immediately bought shares in another company whose shares were likely to rise as a result of the bid, he would be guilty of insider dealing. It seems perfectly reasonable to try to stop such activity, but the present drafting of the Bill is so broad that it could impede the operation of transactions where it is necessary formally to make certain interested parties insiders. It would be extremely difficult for any fund manager to allow himself to be made an insider on a particular share for the purposes of effecting a specific transaction if the effect of so doing were to preclude him from dealing in any other shares in that sector.
As I have said, these are complex matters which do not lend themselves easily to legislation. However, if we are to legislate, it is important to get it absolutely right. As my hon. Friend the Economic Secretary will know, substantial time and money is already spent in the square mile to ensure compliance with existing complex statutory regulations. I sometimes fear that this is better news for lawyers than for shareholders.
My hon. Friend said that several of the outstanding concerns will be covered by guidance. I have no doubt that it will be a great help, but I am sure he will agree that it would be preferable if they could be dealt with in the legislation itself. Uncertainty is a great enemy of confidence, and confidence is vital to the efficient working of any market. My hon. Friend, whose efforts to stamp out insider dealing deserve wholehearted support, has said in that context that he is a great believer in fear. I am certain that he meant fear of the law, not fear of the unknown. I have every confidence that the immense amount of work that he and his officials in the Treasury have put into getting the legislation right will bear fruit as the Bill, which is very welcome in many respects, passes through Committee.

Mr. David Trimble: Many hon. Members have referred to the Criminal Justice Act 1991 and have especially criticised its provisions dealing with unit fines and related matters. I entirely endorse their criticism and I hope that, as well as conducting a review of the 1991 Act, the Home Secretary will get in touch with the Secretary of State for Northern Ireland who in the past few weeks published proposals to introduce into Northern Ireland legislation identical to the 1991 Act, the manifest failings of which are becoming daily more appparent.
The second preparatory comment relates to the speech by the hon. Member for Caithness and Sutherland (Mr. Maclennan), who spoke on behalf of the Liberal party, and to that of the hon. Member for Colchester, North (Mr. Jenkin), who complained about the lack of consultation. The hon. Member for Caithness and Sutherland in particular referred to the Hansard Committee report and said that its recommendation of the use of Special Standing Committees and pre-legislative Committee stages would be appropriate. Such procedure featured strongly in the recent Scottish White Paper as being appropriate for legislation which was not controversial in party political terms. That is precisely what this is. I should have thought that such procedure should be adopted for measures of this nature.
In dealing with part I of the Bill, which deals with extra-territorial jurisdiction and certain offences, the Home Secretary referred in passing to Scotland and Northern Ireland. He said that part I would not apply to them because the two territories have their own legal systems. That is inconsistent because certain provisions in the Bill—three clauses in part V and all of the clauses in part IV—will extend to Northern Ireland. Furthermore, the Bill authorises the making of a negative resolution Order in Council equivalent to most of the provisions in part III and some in part II.
Against that background it is strange that the Home Secretary does not consider it necessary to have an equivalent provision with regard to part I or even to say whether there is any intention to introduce legislation in Scotland or Northern Ireland equivalent to part I. Many of the provisions of parts II, III and IV apply to Scotland anyway. It makes the Bill look rather like a dog's dinner.
As usually happens in these cases, I wish to draw attention to the inadvisability of legislating for Northern Ireland by way of negative resolution Orders in Council which the Bill authorises. As hon. Members will know, the negative resolution Order in Council will not be debated anywhere in the House. By passing the Bill, we are authorising legislation by decree and not providing for discussion of it. There is clearly no intention to discuss the Northern Ireland provisions now being authorised because there is no representative of the Northern Ireland Office on the Government Front Bench, so there is no one to comment on the possible application in Northern Ireland of the provisions authorised to be made by negative resolution Order in Council.
In any event, proceeding by negative resolution Order in Council is inherently inefficient. Such orders will be made only after the legislation has completed its stages because the legislative draftsman in Northern Ireland takes the view that he cannot draft his Order in Council until the Bill i3 complete and all its provisions are known

—in other words, until it has received a Third Reading. That builds in a significant delay before the Order in Council is made.
The provisions authorised by negative resolution Order in Council relate to money laundering and the movement of proceeds of drug trafficking and other criminal offences. Of course, there may be movements from one jurisdiction to another and, in certain cases, there will be movement between Northern Ireland and other parts of the United Kingdom and vice versa. It therefore seems inappropriate that legislation is not coming into effect at the same time in all jurisdictions.
It is particularly inappropriate because the Bill makes provision for Scotland; for example, in clauses 17 and 19, which replicate for Scotland the provisions in clauses 16 and 18. It is the equivalent of clauses 16 and 18 which are to be made by negative resolution Order in Council. It does not make sense. There is an incoherence in the drafting of the Bill, which is inappropriate.
The provisions covering the proceeds of criminal conduct and the laundering of the proceeds of drug trafficking in particular are good ideas, and I was glad that the Home Secretary said that new clauses will be introduced in Committee to extend the provisions into anti-terrorism legislation. There will be provision in anti-terrorism legislation for the inhibition of money laundering and the confiscation of terrorist proceeds as well as criminal and drug proceeds.
That is especially appropriate as terrorist organisations in Northern Ireland to a significant extent now finance their activity through drug dealing. It is therefore not sensible to draw a distinction between laundering the proceeds of drug trafficking and laundering money used to finance terrorist activities. In any event, the laundering of money related to criminal activity is the same whether the criminal activity is defrauding people, trafficking in drugs or promoting terrorism.
The Home Secretary said that the intention was to provide a read-across from this legislation to antiterrorism legislation. I assume that he was referring to the Prevention of Terrorism Act. Some of the Bill's provisions reproduce some of those introduced in the Northern Ireland (Emergency Provisions) Act 1991. The read-across is from the EPA into the Bill and through to the PTA. I see that the Minister of State, Home Office, the hon. Member for Fylde (Mr. Jack) is nodding, so I have got the direction roughly correct.
It is good that the issue is being tackled. Some provisions dealing with the financing of terrorism were introduced into the Prevention of Terrorism (Temporary Provisions) Act 1989, nearly four years ago. I understand that they have been wholly ineffective, that no money has been recovered and that no proceedings have taken place. In reports on the PTA, Lord Colville described its powers as "unworkable", so I am glad that they are now being dealt with.
Provisions introduced into the Northern Ireland (Emergency Provisions) Act 1991 are being borrowed in this Bill. I understand that, as yet, nothing has been done under the EPA and that there has still been no successful recovery. That is not a good precedent. I understand from various sources that it is expected that some proceedings will shortly take place under the EPA. I hope that they will be successful, but it is not a good augury for the provisions before us that the EPA provisions have been on the statute book for two years without having produced results yet.
I hope that when the new clauses are introduced in Committee the opportunity will be taken to examine some inconsistencies that seem to me to exist between the clauses of the Bill and the provisions in the EPA from which I understand that they are derived. For example, the Secretary of State said that, in amending the Drug Trafficking Offences Act 1986, the Bill would make it clear that the civil rather than the criminal standard of proof applied, and would give the court discretion whether to make confiscation orders. However, unless I am mistaken, the EPA equivalent provision—section 47(I)—seems to imply a criminal standard, because it uses language such as:
the court shall … if it is satisfied".
That does not appear to give the court discretion whether to make confiscation orders, so there is an inconsistency.
The hon. Member for Sedgefield (Mr. Blair), who spoke for the Labour party, said that he was worried about the assumptions on which the Bill required the court to proceed when determining whether assets were the proceeds of drug trafficking. But the Bill qualifies those assumptions in two respects. Clause 9(3) says that the assumption can be rebutted if
that assumption is shown to be incorrect in the defendant's case, or
it would be unjust to make it.
Of those two qualifications only one—the first assumption, as to whether it would be incorrect to make the assumption on the facts—applies in section 51(1), the equivalent provision in the EPA. The second—whether making the assumption would lead to an injustice—does not apply. That inconsistency needs to be ironed out.
None the less, the Bill provides a good opportunity to introduce a single coherent code that would apply throughout the United Kingdom. That is necessary. At present we have an unsatisfactory state of affairs, with different codes in the Prevention of Terrorism Act, in the emergency provisions legislation and in the legislation on drug trafficking. The activity of money laundering is essentially the same, regardless of the nature of the crime, so we should have a single code.
We should also ensure that that code is as effective as possible in geographical terms. That partly reflects a desire that it should be effective throughout the British Isles, but it relates to other aspects too. How effective will the legislation be concerning applications relating to money laundered through, say, Gibraltar, the Cayman islands or other such places? That, too is a relevant consideration. I am not sure that our legislation is effective with regard to those territories at present. There is an option to transfer the provision to such places as the Channel Islands and the Isle of Man, but I am not sure whether it has been exercised. What about areas further afield which act as offshore banking centres for the United Kingdom, and through which money is laundered? We must make sure that we deal with them.
The Home Secretary dismissed certain matters in part V as minor, and mentioned only one clause in that part of the Bill. I shall refer to another clause in part V, which the Home Secretary did not mention—clause 44, headed, "Backing of warrants: safeguards." That brief phrase in the list of clauses conceals the fact that it deals with the thorny problem of extradition to and from the Republic of Ireland, specifically for terrorist offences.
That is a matter of considerable importance to us, and it should be important not only to those of us who represent Northern Ireland constituencies, but to all of us in the United Kingdom, especially in view of the terrorist campaign directed towards England and towards this capital, and directed from the Republic of Ireland and carried out by persons largely recruited there. That important matter is in the public eye because of events in the Republic of Ireland over the past few days—the arrests made there and the questions that have arisen concerning them and concerning extradition. Against that background it is slightly surprising that the Home Secretary saw fit completely to ignore clause 44.
Clause 44 makes provision for introducing into the present procedures—strictly speaking, those concern not extradition but the backing of warrants—what in extradition terms is called the speciality rule, the effect of which is to ensure that, if a person is transferred from the Republic of Ireland to the United Kingdom on certain warrants, he can be proceeded against in the courts here only for the offences in the original warrants.
At present, no speciality rule applies between the Republic of Ireland and the United Kingdom. That is because we operate a backing of warrants procedure rather than an extradition procedure. In extradition procedures it is normal to have a speciality rule.
The matter became controversial in 1991 with the Desmond Ellis case. Mr. Ellis was accused of being involved in conspiring to cause explosions in the United Kingdom, and was extradited from the Republic of Ireland to the United Kingdom for certain offences. The magistrates in England then proceeded to substitute different offences for the offences for which Mr. Ellis was originally transferred. That course of action was perfectly lawful and open to them in that case, but it provoked an outcry in the Irish Republic, whose Government behaved as if they thought that a speciality rule existed, or ought to exist. The upshot was that the Crown substituted the original offences. As hon. Members will know, Mr. Ellis was subsequently acquitted and transferred back to the Republic of Ireland.
The important point about that case was that it revealed that the Government of the Irish Republic considered that there was, or ought to be, a speciality rule governing the transfer of fugitive offenders from the Republic to the United Kingdom. They behaved as if assurances had been given by the United Kingdom Government that a speciality rule would be applied. Those assurances were not followed through by the magistrates in the Ellis case because, of course, magistrates and the courts are independent. But now we find legislation surfacing in the Bill to give legal effect to the assumption on which the Government of the Republic of Ireland proceeded. Clause 44 appears to have its origins in the protests made by the Government of the Irish Republic arising from the Ellis case in 1991. I should be interested to hear whether the Minister will comment on that assumption.
That raises the question: why have the Government decided to accede to what I presume to be the requests or demands of the Government of the Irish Republic to limit the range of offences for which fugitive offenders returned under the backing of warrants can be charged? Is there some particular reason? Have they come to some agreement with the Government of the Irish Republic? Has there been a deal?
When he considers that question, the Minister may like to reflect on a question that my hon. Friend the Member for Antrim, East (Mr. Beggs) asked the Prime Minister on 21 November 1991 if he would
assure the House that there will be no further concessions to the Irish Republic in order to obtain the extradition of terrorist suspects to stand trial in the United Kingdom?
The Prime Minister replied:
we do not bargain … we do not do deals."—[Official Report, 21 November 1991; Vol. 199, c. 418–419.]
Thus, the Prime Minister appeared to give the assurance in November 1991 that no further concessions would be made to the Government of the Republic of Ireland in order to obtain the return of fugitive offenders. Yet what is clause 44 if it is not a further concession to the Government of the Irish Republic in that connection? We must therefore ask what has happened between November 1991, when the Prime Minister assured us that no further concessions would be made, and today when we see the concessions in the Bill. Why have the Government done a U-turn? Has the Prime Minister done a U-turn, arid if so, why?
My hon. Friend the Member for Antrim, East asked whether there would be further deals. Perhaps there is no deal. Perhaps the Government are just making the concession without there being any undertaking in return. Perhaps the concession has been made in the fond hope that the Irish Republic will respond by facilitating the return of fugitive offenders. It reminds me of other agreements that have been made with the Government of the Irish Republic in the fond hope that they would do something in return for concessions. Those other agreements have proved barren of the product that was promised or expected. We wonder what will happen here.
It might have been better for the Government to have done a deal. Perhaps they should, as a result of this concession, have pressed the Irish Government to get rid of the Extradition Amendment Act 1987 which the Irish Government introduced to try to limit the effect of the European convention on the suppression of terrorism. Perhaps the Government should have made efforts to improve the European convention on the suppression of terrorism because it has been clearly demonstrated since 1987 that article 1 of that convention is not effective and draws invidious distinctions about matters such as whether a terrorist is using an automatic weapon or a bolt-action rifle. That can be crucial in deciding whether they can be returned under the convention.
Perhaps something could have been done to curtail the readiness with which district judges in the Irish Republic grant bail to fugitive offenders. Cases have been reported in the press in recent weeks which have drawn attention to that practice. Measures were introduced in the United Kingdom, especially in Northern Ireland, to ensure that magistrates cannot grant bail in cases of terrorist offences. Perhaps we should have put pressure on the Government of the Irish Republic to introduce equivalent legislation to curtail the propensity of their district judges, who are the equivalent of magistrates, to grant bail in such cases.
If we are taking the path of introducing a speciality rule into the backing of warrants, it might have been better to consider the procedure as a whole. A speciality rule is incompatible with the whole concept of backing warrants. The backing of warrants procedure was introduced in the middle of the 19th century to deal with transfers between one of Her Majesty's jurisdictions and another, especially

transfers of fugitive offenders from the colonies to England and vice versa. There was no need for extradition and there was no need to question the grounds on which a person was arraigned before the court, because all the courts were Her Majesty's courts. The backing of warrants procedure is an historical survival with regard to the Republic of Ireland, dating from the time when the Republic of Ireland was part of Her Majesty's dominions.
It might be better to have a proper extradition treaty. That would, of course, mean accepting not just the speciality rule, but the prima facie case rule. That would surely result in the Irish having to drop their Extradition Amendment Act 1987 which gives the opportunity for them to refuse to return fugitive terrorist offenders in certain circumstances. In any event, the primary question remains, of what lies behind the decision to introduce clause 44 and thus to negate the Prime Minister's assurance of November 1991.

Sir Ivan Lawrence: My heart goes out to the hon. Member for Upper Bann (Mr. Trimble) and to his hon. Friends in Northern Ireland as they await with trepidation the introduction of the equivalent of a Criminal Justice Act 1992. At least he cannot complain that on this occasion Northern Ireland is being used as a guinea pig for this country, although if that legislation is imminent, Northern Ireland may be a guinea pig for the changes that we envisage as likely to occur. Like the hon. Gentleman, I welcome the fact that the money-laundering legislation is to be extended by my right hon. and learned Friend the Home Secretary and his team to the anti-terrorist legislation in Northern Ireland.
When I began practising at the criminal Bar more than 30 years ago, almost all big crime was armed robbery. Now the big crime is commercial—fraud and drugs-related crime. That has happened since the advent of the computer, of cheaper, more frequent and, therefore, more international travel, and of greater international commercial activity. More and more money is made from international and commercial white collar crime. More and more of our courts are preoccupied with such crime, as are the police, the Customs authorities and the lawyers. We now have the Serious Fraud Office, and a fortune is being spent on criminal legal aid in commercial and international crime.
It is vital that confidence in the City should be retained as the City faces competition from other centres. The Government are to be congratulated on promising continued action against international and commercial crime, and on introducing legislation which keeps up our national defences against a very rewarding form of lawlessness and a calculated and vile form of offending against the laws of states.
It is obvious from our debate that the legislation has a number of good features that we all welcome. It is sensible that we are filling in the gaps and correcting the anomalies which have appeared as the courts have dealt with white-collar crime. The guilty inevitably escape through such gaps either because they cannot be charged or because, once charged, they cannot be convicted. It must be sensible to extend jurisdiction to prosecute Britons who have not fulfilled the requirement for the last act in a chain of criminal offending to have been committed in Britain,


even though most of the other acts in the chain were committed here. The logic of the existing law defies contemplation.
I am especially pleased that we are paying regard to the work of the Law Commission. I have always thought and have often said here that although that body of fine legal brains labours in our interest, its work ends up as dusty tomes in piles which we seldom seem to implement. The more we implement its careful analysis of the defects of our legal system, the better it will be for all of us. I congratulate the Government on taking up the Law Commission's rendering of the foreign aspects of fraud and similar crimes.
The creation of new offences where the prosecuting authorities have previously found themselves powerless to prosecute on the evidence makes good sense. However, we must be a bit careful about the definitions of such offences and their defences. Under clause 18, it will be an offence not to disclose information if a person only suspects that another is engaged in drugs money laundering. The problem will not be, as the hon. Member for Sedgefield (Mr. Blair) suggested, that that will lower the standard of proof. The problem is likely to be that no jury will convict on suspicion alone, so prosecutions will be a complete and utter waste of time and money. We must have regard to that aspect when we lower the hurdles to a point at which common sense is unlikely to sustain any convictions.
I am not sure that I like the defence stated in clause 16(1). It says:
It is a defence to a charge of committing an offence under this section that the person charged acquired the property for adequate consideration.
Does that protect a barrister or a solicitor? How hard must a barrister work? How long must his speeches be? How long must he be in conference before it is considered by some objective body that his work has been adequate? I assure the House that in some cases I say nothing and I ask no questions. I make a very short speech at the end of the day. Are people to say, "That work was not adequate consideration"? Am I to be charged under clause 16?
I am unlikely—I hope—ever to be charged with any criminal offence, but my example serves to underline the fact that we are becoming somewhat lazy and slack about the way in which we define certain offences, and in that regard considerable alarm and concern has been expressed not only about that provision but about the provisions dealing with insider trading. There is still time to look at those provisions again and see whether we cannot improve them so that absurd situations cannot even be contemplated.
There is good sense in giving the courts powers to confiscate assets where the trafficker has died or absconded. Why should his successor enjoy ill-gotten gains? There is sense in giving the courts power to confiscate further proceeds when they come to light after the trial, within the sensible limit of six years. Why should the trafficker benefit in later years from his ill-gotten gains?
The success of the policy of confiscating the ill-gotten gains of serious criminals—which started with the Drug Trafficking Offences Act 1986 and was extended to other serious crimes in 1988, following a pledge at the general election—has been obvious from the fact that some £35 million has been removed from offenders. That policy may even—we cannot be sure—have deterred some from

committing such crimes. However, £35 million is not a very substantial sum to flow from the many cases in which such proceeds have been traced. It is estimated that, in the United Kingdom alone, some £2.5 billion has come from drug trafficking in the past few years. Much more needs to be done to ensure that ill-gotten gains are removed from offenders. In so far as the Bill does that, it is to be welcomed.
The reduction of time waste on petty offences that has been achieved by giving the Crown prosecution service and the Serious Fraud Office the power to filter out small sums will be sensible and will liberate resources for more important work.
Once a criminal has been convicted by the prosecution discharging to a jury's satisfaction the burden of proof applicable in criminal offences, I see nothing at all wrong with the burden changing to require the convicted prisoner to show on the balance of probabilities that his assets are not the proceeds of crime. As the courts were confused by the wording of the 1986 Act—perhaps I should say, the absence of wording—it is wholly sensible to make the original intention clear.
I would go further. Too much of the expenditure on legal aid comes from the payment of very substantial sums to lawyers defending villains in enormous money-laundering and commercial fraud cases. I have often suggested—no one in authority has ever listened to me—that before legal aid is given in such cases we should ask the accused to accept that his assets will be specifically investigated on the balance of probabilities by a state investigator. We should tell him that if he wants legal aid he must declare all his interests and assets. I can assure my hon. Friends that many such persons will say, "No, thank you—I am not asking for legal aid." They will not apply, trials will be shorter, and 'not guilty' pleas will turn into `guilty' pleas.
These days, with very long trials involving a number of defendants, there is absolutely no reason why people should not take their chance and sit in the dock for months on end while their lawyers are being paid substantial fees—in the hope that, ultimately, something may go wrong with the trial or that the jury may say, "This poor fellow has been sitting there and nothing much has happened; we want to acquit somebody, so we shall acquit him." That costs the taxpayer an immense sum of money, but we can stop it if we threaten to investigate the total assets and income of any person who applies for legal aid in respect of a serious trial of that kind. I recall that I warned the Home Secretary of the time about previous convictions when we discussed the Criminal Justice Bill in 1991. No one listened. Perhaps some day someone will.

Mr. Tim Devlin: Does my hon. and learned Friend agree that it is rather shocking that we should have missed the opportunity presented by the Bill to correct anomalies thrown up by the 1991 Act? Two questions—concerning sentencing matters and unit fines—have been a sharp focus of concern and should be dealt with as quickly as possible in a Criminal Justice Bill. Yet neither of them is addressed in the current Bill. Will it be possible for us to table reasoned amendments in Committee to deal with some of the problems?

Sir Ivan Lawrence: Had my hon. Friend the. Member for Stockton, South (Mr. Devlin) been able to tear himself away from his many other important and urgent


engagements, he would have heard that point made, and answered, many times during the debate. It is outside the scope of the long title of the present Bill to deal with that problem. My right hon. and learned Friend the Home Secretary has said and I welcome it—that primary legislation is not necessary to correct the unit fine fiasco.
As I have been rather unkind to my hon. Friend the Member for Stockton, South—who is an assiduous attender of all debates on this subject and who no doubt had excellent reasons for his absence on this occasion—I should perhaps make the point on his side that the faults of the operation of the earlier Act were already clear when the present Bill was drafted and at the time of its Second Reading in the House of Lords in November 1992. Magistrates, solicitors and judges were already writing to us about the problem, and it is not all that difficult to suggest a solution. It is therefore a valid criticism that we did not broaden the long title of the Bill at the right time and take the opportunity to get on with what we shall undoubtedly do.
I am also pleased that we are dealing with the wholly unsatisfactory situation whereby a court cannot pass a sentence until a confiscation order has been made. Sometimes delays between the sentence and the confiscation order are very long and expensive. There will again be a saving in legal aid when leading counsel, junior counsel, solicitors, old uncle Tom Cobbleigh and all do not have to appear months later to deal with the second part of the trial.
In the other place, the Opposition got worked up about the fact that a prison sentence in default of a confiscation order will no longer wipe out the debt. They seemed to think it monstrous that someone should be punished twice. I do not understand that anger. Crime is not a game. The rules must be fair to protect the innocent and prevent excessive sentences, but there is no reason why money that is ill gotten should ever be held on to—even if a person is serving a prison sentence. I am pleased that good sense has taken hold of the Opposition—particularly the hon. Member for Sedgefield—on that point.
The changes in the law on insider dealing are also sensible and welcome. There is no logical reason why insider dealing with company securities should be illegal while insider dealing with debt securities, such as gilts and local authority stock, should be perfectly legal. I have already commented on the need for improvements in definition in that respect. There is also no logical reason why insider dealing on the stock exchange as an on-market activity should be illegal while transactions conducted elsewhere on a computer are legal. The world has changed and the stock exchange is no longer the only place where such transactions are exclusively made. It is obviously sensible that we should wake up to that.
There is every reason why we should bring our law into line with that of our colleagues in the European Community, so long as they do what they undertake to do and so long as we operate on a level playing field in dealing with our commercial criminals. We shall have to watch that one, too, because there are signs that from time to time our colleagues in the European Community do not do what they undertake to do and leave us looking rather Charlie-like as the only side rigorously fulfilling its obligations.
There is every reason why insider dealers who operate across international borders should not be protected, and provisions in that respect are welcome. The need to

maintain international respect for the City of London is very important, because there is so much more competition and because the string of unfortunate experiences over the past few years may have dented that respect. One hopes, therefore, that the anti-fraud measures and the adoption of the banking directives, upon which I shall resist the temptation to address the House, will be very good for the reputation of the City. Those provisions are also very welcome.
Apart from the one or two measures upon which I have commented, I have only two criticisms of the Bill. I dealt with one of those when I responded to my hon. Friend the Member for Stockton, South. He tells me that he was not present in the Chamber because he, like so many of his and our constituents, was burgled. It is important that my hon. Friend the Minister should bear that in mind as we debate a Criminal Justice Bill.
My second criticism relates to clause 1 subsections (4) and (5). I hope that those provisions are never called into effect and that they are never repeated in other statutes. If we give Ministers powers to invent criminal offences without recourse to Parliament, simply through orders, we are going down a very dangerous road.
On balance, the Bill is very useful. I am pleased that the Government are keeping up the relentless campaign against lawlessness, and particularly against the appalling, sickening, drug-related lawlessness. The British people would expect no less. I am also pleased that the measures attract the support of Opposition Members, because the fight against crime should never be a party political matter. I am sorry only that the hon. Member for Sedgefield said, when he began his speech, that there would be no Division at 10 pm as that precipitated a dash to the doors and too few hon. Members have been present in the Chamber to listen to what I think has been a most interesting debate.

Mr. Tam Dalyell: After the Home Secretary courteously gave way to me when I asked him about South America and in particular about Colombia and Peru, he gave a very convincing answer about his work and that of his Home Office officials in Colombia. I thoroughly support that. May I perhaps have a letter from him about Peru? I do not blame him for not answering that, but it is a very important subject.
I wish to refer simply to clause 17 and the issues that arise from it. It is one of the Scottish clauses. In particular, I refer to a letter to the Leader of the House from David Johnston on 5 February 1993 in which he states:
I understand you are considering problems associated with the Parliamentary device of introducing a report which to all intents and purposes can't be challenged (Hansard 28 January 1993: column 1160).
A criminal inquiry is one thing; what purports to be a criminal inquiry in substance is another. I was one of two people who declined to go before the Nimmo-Smith/Friel committee because I did not understand what a criminal inquiry in substance was. Either a proceeding is a criminal inquiry, or it is not. If it is not, there are different rules.
My instinct was thoroughly justified, as things turned out, in not submitting myself and necessarily confidential information to Mr. Nimmo-Smith and Mr. Friel in the light of subsequent events and the fiasco which surrounded an interview that purported to be from The Daily Telegraph. How people conducting what are supposed to


be, in substance, criminal inquiries can as a regular habit talk to journalists while they are undertaking those inquiries is absolutely mind boggling.
The letter says:
As Leader of the House, I think you ought to know I have challenged a particular aspect of the Report of the Lord Advocate's Inquiry into allegations of a conspiracy to pervert the course of justice. Doubtless others may wish to challenge areas where they have first hand knowledge.
In areas of the Nimmo-Smith inquiry where I have first-hand knowledge, it is very wide of the mark. I must report that there are police in my area who are seething with indignation that they are in the position of not being able to answer something which was put to the House by the unopposed return procedure in circumstances which were an abuse of that procedure.
For the sake of time, I refer to a letter dated 4 February from David Johnston to the Lord Advocate:
At 17.12 of last week's report of the Lord Advocate's Inquiry it is claimed that I misheard John Simpson in Snatchers Bar.
The implication was my professional incompetence led to a Member of Parliament being misled and, in turn, causing him to mislead the Lord President.
I told Mr. Nimmo-Smith and Mr. Friel that I was so surprised by what Simpson told me in Snatchers that I suggested to Alan Muir at The Sun that it would be worth his while phoning Simpson in the bar and speaking to him.
To cut a long story short, that happened. It also happened that—as I understand is its custom—The Sun tape recorded a conversation. That tape recording absolutely destroys paragraphs 17.12 and 17.13 of the Nimmo-Smith report:
Simpson: Well maybe. I don't think he will be now but …
Muir: No?"—

Madam Deputy Speaker (Dame Janet Fookes): Order. I am sorry to interrupt the hon. Gentleman, but he seems to be going wide of the Bill which is under consideration. He may make a passing reference to that matter, but he seems to be dwelling on it in some detail.

Mr. Dalyell: Other hon. Members have gone very wide: I have sat through the whole debate. I shall simply limit my comments to one matter:
Muir: No? Right. Well, thank you very much Mr. Simpson.
Simpson: Well, remember that if you mention my name, I'll sue you.
Muir: … there is no problem …
Simpson: But there's … you know you're on the right track …
Muir: Yeh.
Simpson: There's a lot of things about this one that stink to high heaven.
Muir: Mmm.
Simpson: I mean, I am a totally, utterly straightforward person …
Muir: Mm
Simpson: … and always have been and there's a lot of things about this case that stink to high heaven.
Of course, I am obedient to the Chair. I put down a formal question to the effect that this whole correspondence should be put in the Library of the House of Commons. That was refused by the Scottish Office Minister who was operating for the Lord Advocate. I wish to register the fact that that is a profoundly unsatisfactory procedure.
On 10 February, a letter came from the Crown Office. As the House will be aware, in carrying out their inquiry and making their report, Mr. Nimmo-Smith and Mr. Friel—

Sir Ivan Lawrence: On a point of order, Madam Deputy Speaker. There are hon. Members who wish to participate in this debate on the Bill. Time is short, and the hon. Gentleman must know that he can raise this matter on the Adjournment.

Mr. Dalyell: The hon. and learned Gentleman has had his turn; he has already spoken for 20 minutes.

Madam Deputy Speaker: Order. I have told the hon. Member for Linlithgow (Mr. Dalyell) that he is going wide of this Second Reading. I now ask him to deal with the Bill as it stands rather than dwell on specific points which he has made in some detail.

Mr. Dalyell: There are few hon. Members as unsuccinct and verbose as the QC, the hon. and learned Member for Burton (Sir I. Lawrence). Apparently, as QCs become more senior, they think that they can become more verbose. He took up time.

Sir Ivan Lawrence: I kept to the subject.

Mr. Dalyell: This is the lawyers getting at it.

Madam Deputy Speaker: Order. It is not a matter of what another hon. Member thinks. I am saying from the Chair that I have given the hon. Member for Linlithgow sufficient scope. He has made his point and I cannot allow him to dwell on it. He must return to the main factors that are set out in the Bill.

Mr. Dalyell: Against the background of clause 17, I believe that what happened in Scotland—what is generally called Fettesgate—is a shame-making event in our legal history. I speak on behalf of police officers who have been unable to defend themselves given what the Scottish Crown Office has done.
As I know that other hon. Members wish to speak, I shall, of course, obey you, Madam Deputy Speaker. I shall leave it at that at 9.10 pm.

Mr. Michael Stephen: This is a technical Bill; for the most part it makes and amends lawyers' law. Much can and will, no doubt, be said in Committee about the details of it and the way in which it might operate. That being so, I shall not enter upon that discussion this evening.
It is no doubt important to clarify the issue of jurisdiction over offences having a foreign element, to deal with technical issues concerning confiscation orders and to tighten the rules applying to dealing on the stock market. I am sorry, however, that the limited parliamentary time that is available to the Home Office will not be spent on dealing with the more pressing concerns of all our constituents in the field of law and order; for example, the problem of the Police and Criminal Evidence Act 1984 which has turned our policemen into clerks when they should be out on the beat protecting the public.
Also, as has been said many times in the debate, it is important to tackle the already notorious section 29 of the Criminal Justice Act 1991, which together with section 1 effectively prevents the courts from having regard to the


criminal record of a convicted person. I well understand that a convicted person can be said to have paid the penalty for the offences of which he was convicted, but society is entitled to say to him, "That may be so, but if you do it again you will be punished more severely."
We should be dealing also with the scandals caused by what I regard as the ill-conceived system of unit fines. I hope that we shall also soon spend time constructing a legal framework for the excellent proposals of my right hon. and learned Friend the Home Secretary to provide secure education for persistent juvenile offenders. Perhaps we might also find some legislative time to get on with my own private Member's Bill which would reform the law on bail so as to protect our constituents against persistent offenders who commit offences while on bail.
Part I of the Bill before us today would give the courts of England and Wales jurisdiction to try cases of fraud and related offences where there is a foreign element that prevents a prosecution under the law as it stands. I join other hon. Members in congratulating the Law Commission on its excellent work in this area. There are indeed absurdities, as highlighted by the case of Rex v. Harden.
I shall give a hypothetical example. If two Londoners happened to be in France for a short time and one persuaded the other to part with property by deception in France, that offence could not be tried in the United Kingdom. It is right that that anomaly should be rectified. On the other hand, if two Frenchmen happened to be in England for a short time and the same circumstances arose, the English courts would have jurisdiction. I believe that the English courts should have the power to decline jurisdiction in such a case. The prosecution of crime is an expensive business, and I see no reason why the English courts should try cases that have no real or substantial connection with this country.
The English courts should also have power to decline jurisdiction where there would be any question of double jeopardy for someone who has already suffered criminal process in another country for the same offence. No doubt the law and practice of extradition in this country will be carefully examined to ensure that that does not happen.
Part III deals with the confiscation of the proceeds of criminal activity. I welcome the fact that confiscation will apply to the proceeds not only of drug trafficking but of other serious crimes. I have no difficulty with the civil standard of proof when applied to confiscation. It is right that the criminal standard—proof beyond reasonable doubt—should apply to the question whether or not the accused person is guilty of the offence with which he has been charged. The Bill makes no attempt to shift or to change that burden of proof in any way.
Having secured a conviction, we proceed to the question whether assets derived from criminal activity should be confiscated. I have no difficulty with the civil standard in that process. Anyone who does not like that standard has a simple remedy—do not commit crime.
There are many causes of crime. One is profit. It is much easier to engage in some forms of criminal activity than to work for a living., as we and our constituents have to do. We must take every opportunity to take the profit out of crime. One particular form of criminal activity not mentioned in the Bill but of the same genre is pornography—a multi-million pound business about which I spoke at some length in the House on 10 July last year.
The problem there is securing a conviction under the Obscene Publications Act 1959. If a conviction cannot be secured, the Bill's provisions will not apply. The case concerning the book "Juliet" by the Marquis de Sade gives a clear indication that the 1959 Act is wholly defective, because if a conviction cannot be secured on the basis of that book, one cannot be secured in respect of any publication that is alleged to be obscene. We must therefore change the definition of obscenity under the 1959 Act. Meanwhile, we must confiscate the pornographic material—not the proceeds of crime as under this Bill—under section 3 of the 1959 Act, and the civil standard would also apply there. It is right that the civil standard of proof should apply where the confiscation of pornographic material is in question.
We should not be afraid either to take the action which we have in other areas of criminal law—to employ private contractors to seek out offending material, bring it before magistrates, and secure confiscation orders—with the costs to be paid by the pornographers under an award of costs by the court.
Clause 26 gives me cause for some concern, which is shared by my hon. and learned Friend the Member for Burton (Sir I. Lawrence) and the hon. Member for Sedgefield (Mr. Blair). It is wrong that a person should be convicted of a criminal offence simply on the basis that he suspects that someone might have been engaged in crime. The very least that the prosecutor should be prepared to prove is that the defendant believed that another person had been engaged in crime.
Clause 27 and other clauses provide maximum penalties. Clause 27 provides a penalty of 14 years' imprisonment, but why do we bother to specify maximum penalties in Acts of Parliament when it is clear from the cases that the courts do not come near to imposing them fully? The House must make it clear that, when it specifies 14 years' imprisonment as the maximum penalty for an offence, that is the sentence that the House expects to be imposed for the most serious examples of the crime in question.

Mr. Garnier: Does my hon. Friend understand the difference between a mandatory sentence and a maximum sentence?

Mr. Stephen: Of course I do. What I am saying is that the penalty imposed for serious examples of a particular offence often comes nowhere near the maximum penalty that Parliament laid down for it.

Dame Elaine Kellett-Bowman: Does my hon. Friend think that the matter is assisted somewhat by the fact that the prosecution can now appeal against too lenient a sentence? It has certainly helped in some rape cases.

Mr. Stephen: I do. I wrote an article which was published in 1986 which, together with the efforts of a great many other people, resulted in section 36 of the Criminal Justice Act 1988 which gave the Court of Appeal that power.
One issue of serious concern to our constituents in the case of offences with which the Bill is concerned and other offences generally is the right of silence, to which reference was made earlier.
Under section 2 of the Criminal Justice Act 1987, a person suspected of serious fraud can be required by the Serious Fraud Office to answer questions. Failure to do so may result in criminal penalties.
A person suspected of evading income tax has no right of silence. He must prove that he does not owe the tax that he is alleged to owe. A person suspected of drinking and driving does not have a right of silence. He must give a specimen or pay the full penalty. But a person accused of armed robbery, rape, burglary or murder has the right simply to sit back, arms folded, and say, "Prove it if you can." We must therefore change the law so that the jury can take fully into account a failure to speak in circumstances where an honest man should have spoken.
I have some concerns with part IV which seeks to regulate dealings in stocks and shares. White collar crime is just as reprehensible as blue collar crime and must be punished accordingly. I have no personal interest in the City, but it grew to pre-eminence and contributed vast sums of money to our national revenues from invisible earnings, as it still does, without the burden of the complex regulations that Parliament has visited upon it in recent years.
It is easy to point to consumer benefits. We must, when we consider legislation of this kind, have regard to consumer costs, because the costs of compliance in the City are high. It may well be that our limited resources for fighting crime might be better employed elsewhere.
This is a useful technical Bill which is of great interest to lawyers and accountants, but of marginal concern to our constituents. It needs some discussion in Committee, but I hope that it will pass quickly through the House without taking much more parliamentary time, so that we can concentrate on criminal law matters which are of much greater concern to all the British people.

Mr. Alun Michael: I agree with the hon. Member for Shoreham (Mr. Stephen) that the Bill is of limited and marginal interest. It deserves half a cheer. It has been welcomed for what it tries to do but hon. Members have reflected its inadequacy and lack of precision and the Government's failure to demonstrate a real interest in putting right the criminal justice system.
Hon. Members have put forward the complaints of their constituents and the police about the Government's failure to deal adequately with the criminal justice system and have complained about the enormous problems that result. Like the dog that did not bark, the main problem with the Bill is what it fails to do.
One criticism of the Bill is that it has proceeded so slowly to this stage. At the beginning of the debate the Home Secretary said that we should not move too quickly. I think that his comments were based on his experience of how things went wrong with the previous Criminal Justice Bill. He has certainly fulfilled that requirement as it has taken four months for the Bill to reach Second Reading. We are owed an explanation from the Minister of why the Bill has taken so long to reach this stage. Another criticism of the Bill is that it is too narrowly drawn. A third criticism is that it has not been adequately thought through.
When dealing with the problem of drugs and trafficking in drugs, we are confronting one of the major issues of our

society today. That point was rightly reflected in the introductory remarks by my hon. Friend the Member for Sedgefield (Mr. Blair). We certainly need to underline the fact that the Government are presently taking appalling risks, one of which is their failure to deal properly with drug misuse, because of the background of the HIV virus and the danger that that poses to many people in our society. Prevention must be properly addressed, but that is not happening. The problen of drugs in our society is one that needs a strategic and comprehensive approach. While the measures in the Bill are to be welcomed, they are a fragment of the provisions that the Government should be introducing.
Given the fact that everyone has referred to the Bill as comparatively narrow, it is ironic that the Home Secretary referred to it in his introductory remarks as a sort of first draft. The Committee that will consider the Bill has an important and onerous job in scrutinising and improving it. However, the Bill should reach Committee with some certainty and as a precise instrument that has been given careful and detailed consideration by Ministers as well as civil servants, following extensive consultation and expert advice. It should not be cast into Committee by the Home Secretary as his first thoughts on the subject. He should not pass major responsibility to his Minister of State to sort out the Bill in the aftermath of the Second Reading debate.
One of the Bill's major omissions, to which my hon. Friend the Member for Warwickshire, North (Mr. O'Brien) referred, as did hon. Members from both sides of the House, is its failure to deal with the Criminal Justice Act 1991 and its shortcomings. My hon. Friend's remarks were cutting and well justified, and I commend his initiative in giving the House the opportunity to put matters right in this Session with thoughtful amendment to the Bill. I look forward to the House being given the opportunity to consider the measure further.
The Home Secretary failed to heed the warnings of my hon. Friend the Member for Sedgefield last October. The provisions could have been included in the Bill. Although the hon. and learned Member for Burton (Sir I. Lawrence) and others rightly reflected that the Bill as it now stands, and its title, preclude such an amendment, it could have been allowed for initially. This is the second Criminal Justice Bill that has been too tightly drawn and has prevented the House from doing what it should, and making constructive amendments.
During the passage of the Criminal Justice Act 1991, I sought to introduce amendments to help with the prevention of crime and the diversion of young people into criminal activity. As the aim of the 1991 Act, as expressed by the Government, was to reduce the numbers in prison and in custody, one would have thought that measures to improve prevention would have been welcomed. But the Clerks had to advise that that Bill was so narrowly drawn—I think that they referred to it as having an extremely curious geography—that we were unable to make some of the constructive contributions that were and are needed by society. To our great regret, we shall have the same experience with this Bill because it is so narrowly drawn that only the two major issues that it addresses will be open to consideration and improvement in Committee.
I very much regret the inability to see the wood for the trees. It is becoming a tradition among Conservative Members to fail to consult, listen and understand their own legislation. I hope that a lesson has been learned. This


is the third Bill this Session that the Home Secretary has not read in advance of the debate. However, he had the grace to say that he was giving his junior Minister the task of sorting out the Bill in Committee. I suppose that that is at least a welcome step.
Two aspects of the 1991 Act should have been dealt with. One relates to the problems caused by Ministers seeking to interfere in matters that they do not understand. The first of those relates to the figures that the units apply and which have fettered the courts in reaching decisions. Secondly, they have removed discretion from magistrates who have traditionally exercised common sense. I have had experience in the previous system of recommendations for the local bench on motoring fines. The magistrates looked at the outcome of applying the bench's unit strategy and said, "Does this make sense?"
Common sense should be applied in the courts and the 1991 Act was mistaken in not respecting that. I hope that in considering the details of this legislation in Committee and more generally the Home Secretary and his colleagues will accept that courts should have the ability to exercise common sense in dispensing justice.
Another aspect is the ability to consider previous offences. It is important for courts to be able to deal with such offences without imposing a sentence that is totally out of proportion to the offence that is being considered. That is especially relevant to drug offences. A person who continually steals Mars bars is guilty of stealing only those, but the repetition of crimes involving drugs or violence is extremely serious and the court dealing with them needs to recognise the background to the offences.
The Home Secretary said that the intention in Committee is to deal with one omission: to amend the Bill to deal with terrorism. We certainly welcome that but such provisions should have been in the Bill in the first place. We are also worried that the issue has not been thought through. I hope that in his winding-up speech the Minister will deal with that. In dealing with crimes related to drugs, a court is also dealing with the proceeds from those crimes whereas in terrorist cases the proceeds from other offences are used to finance terrorism. That may involve drug trafficking, in which case it would be dealt with by the legislation.
How will the laundering of money to support terrorism be dealt with by the Bill when the offence that creates the relevant funds is highly unlikely to arise from a terrorist offence itself? It may arise from fraud, burglary or armed robbery. Will those offences give rise to the Bill's powers of seizure in relation to drugs? I hardly think so. Is the burden of proof in relation to such offences to be dealt with? Surely not, and in that case how do we tie the offence and the intention to use the proceeds for terrorism to court procedures that are clearly related to drug-related offences but are not clear in relation to the possible application of money for terrorist activities?
The Home Secretary spoke about the success of law enforcement agencies. In response to a question, he said that the quality of drug liaison officers was more important than pouring in staff and money to undertake routine tasks. That is a curious comment in view of the fact that the Bill creates a massive need for money and staff to undertake routine tasks.
I give the simple example of disclosure. Without resources, the provision to force more disclosures of suspect transactions that are referred to in clauses 18 and 26 will be counter-productive. We heard earlier that there

are currently about 5,000 disclosures and that in the Metropolitan police area they are dealt with by 21 officers. That has been found to be inadequate in terms of the pressure that is required to deal properly with the amount of information that becomes available.
The Bill will at least triple that amount of disclosure, by a fairly conservative estimate. It is clear that some of the information that will become available will be of lower quality, because it will have been triggered by suspicion rather than belief. We see and welcome the purpose behind the legislation, but there is also a need to boost morale in the police and other agencies by demonstrating that those bodies will have the resources to use it.
The complaint has been made that seized assets do not assist the fight against drug-related crime. Morale would certainly be helped if such assets were directed towards that fight, either through drug enforcement agencies—which, in America, are self-financing—or by preventing the market in drugs, which leads to the trafficking that the Bill aims to prevent.
Surely, Ministers should show not only that they will deal with drug trafficking, but that they intend—as Opposition Members have put it—to be tough on the causes of drug trafficking and drug misuse. It is difficult to see how that can happen, and how disclosure can assist the police materially, given the freeze in police numbers. The Home Secretary referred to the likelihood that the police will have greater freedom to deal with their own resources; one chief constable spoke to me, in a rather jaundiced way, of the freedom to work flexibly within resources that would undoubtedly become increasingly inadequate. That is the experience of recent years. The fact is that we need both the bravery and initiatives of officers in the front line, and the painstaking back-room work that needs time, staff and money—a need that the Bill will increase.
The Home Secretary and his colleagues must realise that the failure to recognise how all parts of the police service need to fit together and complement each other causes immense anger and frustration among police officers, and all who work with them and value their work. The privatisation of security services, with prisoners escaping or allowed to go free—today, a private security vehicle ran into a police car—would be laughable were it not so serious. The privatisation of parts of the police service, which the Home Secretary wants to bring about, would be an even more dangerous and mistaken step. Thank God it is not within the remit of the Bill; otherwise, the right hon. and learned Gentleman might be tempted to introduce it.
There is a need not only for the matter to be tidied up—we shall try to do that in Committee—but for the Government to recognise the strategic importance of providing the police with the resources, as well as the legal means, to deal with the serious problems that we face.
I pay tribute to the hon. Member for Lewes (Mr. Rathbone) for his work as chairman of the all-party group on drug misuse. He has referred to many of the problems, and a number of hon. Members have mentioned the undermining of residential facilities for drug misusers. Again, prevention is necessary. Although the Bill and its intention are welcome, they must be part of a range of measures to deal with drugs and similar difficulties.
I was interested to learn that the hon. and learned Member for Burton is not listened to by Ministers either, despite his willingness to provide advice on insider dealing from within the legal profession. Hon. Members on both


sides of the House have made it clear that the police and the community want the Government to take crime seriously—especially youth crime—and regret the failure of this narrow Bill to deal adequately with such issues.
My hon. Friend the Member for Sedgefield spoke eloquently of the development of drug use and addiction, and called for deterrents and the proper use of funds. I hope that the Minister will respond to that call. Let me remind him of the need to deal with couriers from Nigeria, thus saving the cost of imprisonment, child care and future personal and social services.
The hon. Member for Surrey, East (Mr. Ainsworth) said that he felt that there was no qualitative difference between white collar crime and other forms of crime. We need to be careful about suggesting that there are no distinctions to be drawn. Offences need to be pursued with the enthusiasm that is appropriate to the seriousness of the crime and its impact on society. In relation, however, to the financial aspects of the Bill, I point to the grave reservations that have been expressed by a number of bodies—in particular by the Hundred Group of Finance Directors on behalf of the largest quoted companies in the United Kingdom which have expressed major concerns over the proposed legislation on insider dealing. They have referred to ambiguities implicit in the drafting of the Bill which they believe are so serious as to result in the legislation hindering legitimate business activities and market practices.
I seek from the Minister now the granting of their request for the guidelines to be issued in time before the Bill is considered in Committee. I hope that the Minister will grant their request. Guidelines would have a serious bearing on the need for amendments to the Bill in its current form. When we dealt with the immigration measure that went through Parliament in 1988, the Home Office continually refused to recognise that draft orders were available but, curiously enough, those orders were published the day after the Bill had been considered by Parliament.
I ask the Minister to give the House an undertaking tonight that draft guidelines will be available before the Committee sits so that members of the Committee can be properly informed and can properly deal with the issues that have been raised in the debate by hon. Members on both sides when drawing attention to the shortcomings of the legislation.
Guidance notes are not enough for many aspects. Some cases have led to desperate difficulties. A finding of guilt can lead to heavy penalties and the loss of reputation. The ruining of a reputation can be extremely damaging. If someone transgresses seriously, it is right that that person should be punished, as the Bill intends should happen. It is also right that individuals should be protected by the legislation. It is important, therefore, in relation both to insider dealing and to disclosure, that there should be proper guidelines so that no individual is in any doubt about what he or she is required to do under the legislation.
It is also important that City and financial institutions should be in no doubt about what they are required to do and that there should be a proper framework for their employees. There should be proper recording of the

reporting of suspicion so that there is no danger that, by error, individuals put themselves in jeopardy under the law.
My hon. Friend the Member for Warwickshire, North made a thoughtful speech, based upon his experience. I hope that his direct courtroom experience, and also his experience when investigating a major case of insider dealing, will be taken into account by the Minister in Committee. We need to make use of that experience and expertise.
The Committee will need to consider changes to tighten up the Bill. We need clear guidelines for the training of staff. Staff working in the City must be protected. To be effective, the legislation needs to be clear.
The Bill has many failings, but the issues with which it deals are important. Therefore we shall seek to improve the Bill in Committee. We shall endeavour to assist the Minister who has been instructed by the Home Secretary to sort it out in Committee. If the Minister is willing to accept the help and advice that we offer, I am certain that the Bill will be a stronger and better measure when it returns to the House on Report.

The Minister of State, Home Office (Mr. Michael Jack): This has been an interesting and wide-ranging debate. I congratulate all right hon. and hon. Members on their contributions. I was struck by the low-key appreciation for this measure from the hon. Member for Cardiff, South and Penarth (Mr. Michael) compared with the much greater appreciation of the hon. Member for Sedgefield (Mr. Blair). Perhaps a difference of opinion is opening up on the Opposition Front Bench.
The hon. Member for Cardiff, South and Penarth made particular reference to the provisions on insider dealing and asked whether we could make guidelines available before the Committee stage. My hon. Friend the Economic Secretary has assured me that, when the clauses are considered in Committee, some of the clarification that the hon. Gentleman seeks will be provided.
I was disappointed that the hon. Member for Cardiff, South and Penarth chose to make a few cheap comments about the proper attempts of my right hon. and learned Friend the Secretary of State to ensure that the police carry out their duties in the most effective manner and that they are doing the duties that they should be doing. There will be more time to debate that, but I am sorry that the hon. Gentleman had a go at those proper activities.
The hon. Member for Cardiff, South and Penarth asked about Nigerians who have been convicted of importing drugs into Britain. The length of sentence for such offences is a matter for the courts, but it does send out a deterrent signal. The hon. Member for Sedgefield asked whether we had done anything to transmit that information to Nigeria. We ran a poster campaign in west Africa and the Indian sub-continent, making clear the penalties for importing drugs illegally into Britain. That campaign will be renewed in the forthcoming year. The Nigerians display warnings at their airports. We have helped the Nigerian authorities by, for example, training their law enforcement officers, and we have offered assistance to deal with Nigeria's internal drug problems. It is a matter that we take seriously. I hope that those comments help the hon. Member for Cardiff, South and Penarth.
The hon. Member for Sedgefield set the tone for the debate by welcoming the Bill on behalf of the Opposition. That has been a common feature of all the speeches. There have been words of regret that, as my right hon and learned Friend the Home Secretary said, the Bill was not so drafted as to address the problems that many hon. Members have mentioned with the Criminal Justice Act 1991. My right hon. and learned Friend made our position clear: we have listened, we know what the problems are and, if necessary, changes will be made. I wanted to emphasise that.
The hon. Member for Sedgefield and other hon. Members rightly drew our attention to the size and scale of the drug problem. The Government spend some £500 million per year on the campaign against drugs and their preventive strategy, which shows how seriously we take the problem. The hon. Member for Sedgefield criticised the work of other Government Departments, such as by the Department of Education, but the national curriculum deals with substance misuse. Although specialist staff may not be available in all schools—it is up to each authority to decide whether to maintain that service—such information is available to children under the national curriculum. The Department of Health, too, in the way in which it conducted European drug prevention week, showed how it is contributing to the fight against drugs.
The hon. Member for Sedgefield rightly mentioned the work of the police in drug prevention. He mentioned King's Cross but, sadly, did not also mention the 250 arrests that were made in that operation. The activities of each force, the regional crime squads and the national criminal intelligence service show how all our law enforcement agencies are working together to combat the threat of drugs. Their efforts will be underpinned by the Bill. It is important to recognise that fact.
One of the issues raised in our debate was the Bill's impact on our financial institutions and how financial institutions outside the banks were reacting to the requirements. I draw the House's attention to the guidance notes for banks and building societies issued in December 1990 by the Bank of England. The notes make clear what the financial institutions should be doing not only to prepare themselves for this legislation but to make the working of the Drug Trafficking Offences Act 1986 effective.
The fact that about 11,000 reports of information arising from existing legislation have already reached the national criminal intelligence service shows that the financial institutions in this country are already responding to the challenge of the 1986 Act and will not have to change their procedures substantially to incorporate the requirements of the EC directive because it was anticipated in the guidance notes. There is no doubt that the point raised by the hon. Member for Sedgefield is well met by the notes, which I commend to the House.
The hon. Member for Sedgefield and others asked how we were dealing with south American countries in terms of bilateral arrangements to improve, for example, confiscation procedures. Work has been concluded on bilateral agreements with Argentina, Ecuador, Guyana, Mexico, Panama and Uruguay, and work continues with a range of other south American countries to reinforce our procedures in that respect. Much of the work was pioneered by my right hon. and learned Friend the Home Secretary on his trip to that part of the world—[Interruption.] I have to justify why he went. In addition,

through our work with the United Nations against drugs, we have given further material assistance especially to countries such as Colombia. We take seriously the attempt to extend the fight against drugs on an international basis.
The hon. Member for Sedgefield also spoke of the problems which he believed were connected with the use of assumptions in the Bill. The nature of money laundering, and of drug trafficking in particular, is a life style offence. It perhaps goes beyond the range of other types of criminal offence, which is why the assumptions—the use of which we make mandatory, as the Bill outlines—are a real and proper requirement, recognising the nature of drug trafficking itself. I think that the House generally agreed with that.
The hon. Member also questioned the effectiveness of existing confiscation arrangements. I should point out that by the end of 1991 3,420 confiscation orders had been made under the Drug Trafficking Offences Act 1986. That proves that the legislation is working, as does the fact that the amount of money which has now been confiscated, or which is the subject of confiscation orders, has risen to about £50 million.
The hon. Member for Sedgefield and others also mentioned clause 18 and the nature of the proof required when an offence may be connected with knowing of or suspecting money laundering. Although I understand the concerns expressed, I should point out that the criminal level of proof is still required to sustain such an accusation. Equally, we should bear in mind the fact that at that level the process could well include a large number of people in financial institutions. That means that the prosecution in such cases must be entirely sure of the facts in bringing such a charge. That shows a balance in the way the legislation is framed.

Sir Ivan Lawrence: The jury will be told that suspicion is never enough for a criminal offence, so for the jury to be told that they must be satisfied that they are sure that there was a suspicion will be so confusing as to make the provisions impractical nonsense.

Mr. Jack: I know what my hon. and learned Friend says on the subject, but that is a matter for the prosecutors in terms of sustaining the prosecution. Clearly they will know what the evidence is, and on what basis they are bringing the charges. As I have said, a high level of proof is required of the prosecution if the subjective offences are to be sustained. They were indeed the subject of considerable debate in another place.
The hon. Member for Upper Bann (Mr. Trimble) and others discussed the way in which the proposals will relate to Northern Ireland. Indeed, the powers to confiscate the proceeds acquired by people involved in terrorist-related activities are at present available only to the courts in Northern Ireland. We want to ensure that the money laundering and confiscatory arrangements are kept parallel—I nodded rather vigorously at the hon. Gentleman when he said as much. There must be a basis which extends throughout Great Britain for proposals on money laundering. Equally, as the hon. Gentleman said, both the Prevention of Terrorism Act and the Northern Ireland (Emergency Powers) Act will require modification to incorporate those arrangements. I hope that what I have said helps the hon. Gentleman.
The hon. Gentleman also mentioned clause 44, which effectively brings into our law what is already happening


between the Republic of Ireland and this country. The intention is entirely correct in terms of trying to ensure that the extradition arrangements work as effectively and smoothly as possible. I know that there are sensitivities on that matter and I have taken careful note of the hon. Gentleman's words.
The hon. Gentleman also asked about the differences between the effects of the Bill, especially part I, on the various parts of the United Kingdom. Those differences are the result of the different legal codes in Scotland, in Northern Ireland and in England and Wales. I gather that the Northern Ireland Office is considering the hon. Gentleman's second question—I want to assure him on that matter.
Many other hon. Members spoke about other matters, especially the insider dealing provisions. I shall try to deal generally with the questions raised, and in doing so I put on record a quotation from "Investor Relations: a guide for directors", produced by the stock exchange. That quotation puts in context some of the fears and concerns that have been expressed in all parts of the House, and illustrates how the existing advice already goes beyond the part of the Bill which relates to insider dealing:
It is vital that no group of investors of market commentators be given privileged access to price-sensitive information. However, it can often be helpful to provide background information to brokers' analysts who play a key role in analysing published information given to the market, and to major investors or potential investors in the company. This might include both a restatement and elaboration of information already released and material on the company's products and processes which, while not price-sensitive, assists analysts or fund managers in their understanding of the nature of a company's business.
That quotation underlines what my hon. Friend the Economic Secretary to the Treasury said about that part of the Bill representing "business as usual". My hon. Friend has been present throughout the debate and listened to hon. Members' comments, and I know that he will take them into account in the continuing work on the consultations that he, his officials and others are having with members of the financial community, in order to take on board and reflect some of the concerns that hon. Members have expressed in the debate.
Time prevents me from going into many of the other points raised. In the Government's view, this is a wholly benevolent Bill. It will strengthen the fight against drugs so as to ensure that we have the most effective regime to counter those who have sought to profit from money laundering and from drug trafficking. It will ensure that we deal with those people on equal terms with other members of the European Community and that we take our part in the international fight against drugs. I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 61 (Committal of Bills).

Orders of the Day — CRIMINAL JUSTICE BILL [LORDS] [MONEY]

Queen's Recommendation having been signified—

Resolved,
That, for the purposes of any Act resulting from the Criminal Justice Bill [Lords], it is expedient to authorise the payment out of money provided by Parliament—

(a) of compensation for loss suffered as a result of the making of confiscation orders which are varied or cancelled; and
(b) of grants to such persons as the Secretary of State considers appropriate in connection with measures intended—
(i) to combat or deal with drug trafficking or the misuse of drugs; or
(ii) to deal with consequences of the misuse of drugs.—[Mr. Andrew Mitchell.]

Orders of the Day — EUROPEAN COMMUNITY DOCUMENTS

Motion made, and Question put forthwith pursuant to Standing Order No. 102(9) (European Standing Committees).

CANE SUGAR

That this House takes note of European Community Document No. 4439/93, relating to guaranteed prices applicable in the 1992–93 delivery period to cane sugar originating in the African, Caribbean and Pacific states; supports the Government's objective of ensuring that prices paid to the African, Caribbean and Pacific countries are both in accordance with the terms of the Lome-Sugar Protocol and a level which enables the viability of cane sugar refineries in the Community to be maintained; and supports the Government's intention to press for a radical review of the European Community sugar regime which will produce some deregulatory benefits for the Community's sugar consumers, while accepting a continuation of that regime until 30th June 1994.—[Mr. Andrew Mitchell.]

Motion made, and Question put forthwith pursuant to Standing Order No. 102(9) (European Standing Committees).

DEVELOPING COUNTRIES

That this House takes note of European Community Document No. 9910/92, relating to demography, family planning and co-operation with developing countries; and welcomes the Resolution adopted at the Development Council on 18th November 1992, which takes full account of United Kingdom interests in this field.—[Mr. Andrew Mitchell.]

Question agreed to.

Orders of the Day — RIGHT TO KNOW BILL [MONEY]

Queen's recommendation having been signified—

Resolved,
That, for the purposes of any Act resulting from the Right to Know Bill it is expedient to authorise—
(a) the payment out of money provided by Parliament of—
(i) any expenses incurred by a Minister of the Crown in consequence of the Act;
(ii) any increases attributable to the Act in the sums so payable out of money so provided under any other enactment;
(b) the payment out of the Consolidated Fund of—
(i) any salary payable in accordance with the Act to the Information Commissioner appointed under the Act; and
(ii) any pension so payable to or in respect of the Commissioner.—[Mr. Andrew Mitchell.]

Orders of the Day — CARDIFF BAY BARRAGE BILL

Order read for resuming adjourned debate on Question [2 April],

That the Amendment to the Cardiff Bay Barrage Bill set out in the Lords Message of 18th March be referred to the Examiners of Petitions for Private Bills.—[Mr. Andrew Mitchell.]

Question again proposed.

Hon. Members: Object.

Debate to be resumed tomorrow.

PETITION

Rail Privatisation

10 pm

Mr. Hugh Bayley: I present a petition that expresses the grave concern of many of my constituents in the city of York and in many other places about the horrendous threat to jobs posed by rail privatisation. The petition reads as follows:
To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled. The Humble Petition of residents of the City of York and other parts of the United Kingdom, showeth That they wish to protest against the Government's plan to privatise the railways. Wherefore your Petitioners pray that your honourable House calls for all possible steps to be taken to protect the jobs of those connected with the rail industry in York. And your Petitioners, as in duty bound, will ever pray, &c.
The petition is signed by David Flintham, the editor of my local paper, the Yorkshire Evening Press, by Robert Beaumont, the chief features writer, and by more than 12,000 other of my constituents and people of neighbouring areas.

To lie upon the Table.

Arachnoiditis

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Andrew Mitchell.]

Mr. Barry Field: I thank you, Madam Speaker, for granting me this Adjournment debate this evening. You appear to be in rude health. Clearly, the Easter recess has done you good.
This is the first occasion since my arrival in the House on which I have had an Adjournment debate on a national issue. Hitherto, all my Adjournment debates have been exclusive to my constituency. I have two admissions to make. First, I had never heard of arachnoiditis until it was raised in my constituency by the chairman of the Arachnoiditis Self Help Group. I believe that I was in good company, because none of the journalists on the local television, radio or newspapers had heard of it, either.
I understand that arachnoiditis is the inflammation of the delicate membranes surrounding the spine and nerve routes. They become inflamed, thicken and adhere to other tissues, such as nerves. The condition has been associated with spinal infection or injuries, including spinal surgery, the most common of which is for slipped discs. It is allegedly caused by injections to the spine in connection with procedures such as myelography. It was the fact that the Isle of Wight consultant who is responsible for myelographies told our local newspaper that, because of the risks involved, he would not dream of having one himself, that drew the matter to my attention and to that of a number of others.
The second admission that I have to make is that, until I put my back out—fortunately only on one occasion—I did not realise the sheer unspeakable agony of a back complaint. There is no respite from it, whether one stands up or tries lying on a bed or even on a hard surface such as a floor.
I see that the Minister, who also appears to be in his customary rude health, is in his place. I do not know whether he has ever suffered from a back complaint. I have noticed that, since his translation from the Whips Office, he has developed red box stoop but, apart from that, he has always seemed to me to be a bouncy and healthy Minister; but if he has had the unfortunate experience of putting his back out, he will know precisely why I have initiated the debate.
I pay tribute to my constituent, Mr. Ron Sheppard, who is the chairman of the Arachnoiditis Self Help Group. He has worked tirelessly for the cause, and his breakthrough came when the Parliamentary Under-Secretary of State, my noble Friend Baroness Cumberlege, wrote to me on 5 March:
it is possible that any procedure involving puncturing the membrane around the spinal cord could lead to the introduction of harmful bacteria and hence cause inflammation such as arachnoiditis.
I thank my noble Friend Baroness Cumberlege, through my hon. Friend, for cutting through all the red tape and bureaucracy and giving the brave little band of back sufferers the answer straight down the line. That is a triumph for open government.
The first great concern is that people still feel that they are not properly counselled about the risks involved in myelography. My noble Friend continues in her letter:
In many situations, MRI"—
magnetic resonance imaging—


will be a suitable alternative to a myelogram. Currently, clinicians have to consider for individual patients the balance between the risks of myelography and the risks of waiting for the availability of an MRI scan. The patient should be involved in this decision through informed consent.
The self-help group has a number of letters from people all over the country who say that they were never properly counselled concerning the risks involved. I have asked the chairman to select a sample to illustrate my point; I am sure that the Minister will take my word for it that I could provide the originals of those letters and many more besides. The first is from the chairman, Ron Sheppard, who says:
I was never warned of any risk before myelography".
Mrs. Rogers of Sussex writes:
At no time was I warned there may be side effects".
Mrs. Ince of London states:
never at any point was I informed of the dangers of the said procedure.
Mrs. Paton of Cornwall says:
No-one seems to tell you anything".
It has been put to me—I am sure that my hon. Friend the Minister will be sympathetic to the point—that when one is suffering the unspeakable and excruciating agony of this back disorder, one will sign one's life away to anyone who will promise one relief from it. I hope that my hon. Friend will take that point on board and that, perhaps as a result of this Adjournment debate, we will see the introduction of a large, bold-typeface warning about the risks involved in such treatment, to be signed in duplicate by patients, with one copy to be taken away by them and the other to be placed on their file, so that in future there can be no doubt whatever that patients have been properly counselled in such circumstances.
As Baroness Cumberlege said in her letter, MRI scans have an important part to play in the alternative therapy that will be available in future. I understand that, in September 1992, the Royal College of Radiologists issued a report, which is brought to the attention of the Secretary of State for Health personally, estimating that MRI scanner needs of the United Kingdom amount to approximately 225, and that there are currently 90 in operation. I am pleased to say that one is made available regularly on the Isle of Wight, and it plays an important part in the diagnostic health care of my constituents.
When my hon. Friend the Minister replies to the debate, he will no doubt point out that, in 1991, the Secretary of State for Health announced a three-year rolling programme for MRI scanners. However, the problem is urgent, and one reason for this debate is to call for an accelerated programme. Indeed, with fundholding, these matters are being discussed actively with consultants and general practitioners throughout the country. In my constituency, Mr. Paul Bingham of the Isle of Wight health commission published an article in the "Public Health Quarterly" to provoke discussion on the use of MRI scanners in future.
An article in today's Times states that my hon. Friend the Minister will announce next week an increase in the limit for regions and national health service trusts from £50,000 to £250,000 for leasing medical equipment and building new developments. Having spent my first Parliament campaigning against the wretched Ryrie rules, I am delighted that, in my right hon. Friend the Prime Minister, I have at long last found a champion for their

total abolition. If the article in The Times is true, next week's announcement will hopefully be the manifestation of that abolition.
I want my hon. Friend to go further than that. The provision of pound for pound has been an area of great success in the Government. Every £1 raised locally is matched by El from the taxpayer's pocket. Such a scheme for MRI scanners would be welcomed by the general public. Many district health authorities already operate such schemes, but if they were encouraged by the Department of Health, that would be a very welcome initiative.
We can all decide which good causes to support, but none of us has a choice about when we are ill. That is why our national health service is so precious to us all. I hope that the Minister will pick up this baton and run with it till we have a result. Such a scheme would accelerate the introduction of this wonderful "Tomorrow's World" technology throughout the health service, and it would be just the kind of dynamic challenge that my right hon. Friend the Secretary of State for Health had in mind in involving private financing in the health service.
I have some questions for the Minister. Are there any central records of the number of myelograms being carried out? What more can be done to ensure that GPs are aware of arachnoiditis and so ensure its proper diagnosis? Are there any proposals for looking into alternative pain management to avoid spinal injections? Has the Department of Health considered the work of Professor Jayson at Manchester hospital, who has been researching the condition and is president of the self-help group? Has the Medical Research Council a part to play in considering the problem?
I understand that Ron Sheppard has written to the Select Committee on Health asking whether the whole problem can be examined. I know that the Minister will, as always, be as helpful as possible when he replies to the debate, and that he will do his best to continue that ray of hope brought into the lives of so many sufferers by the letter from Baroness Cumberlege. I hope that my small contribution tonight will encourage those who have suffered for so long, and that I may have convinced the Minister that arachnoiditis really is a pain in the back.

The Parliamentary Under-Secretary of State for Health (Mr. Tom Sackville): I congratulate my hon. Friend the Member for Isle of Wight (Mr. Field) on his very full and lucid account of the serious problems faced by people who suffer from arachnoiditis. I acknowledge the close interest that he has taken in the matter.
I am only too familiar with the problems facing people with arachnoiditis. I have been made aware of just how great the suffering can be by my constituents and through the Department. Perhaps it would be helpful to hon. Members if I briefly describe it.
Arachnoiditis is an uncommon condition which is characterised by chronic inflammation and thickening of the sub-arachnoid space, which covers and protects the brain and spinal cord. It may develop for several reasons. These include meningitis, suba-rachnoid haemorrhage, tumours, trauma from injury or surgery and irritants, including the contrast agents used in myelography. The condition traps nerves as they leave the spinal cord.
Arachnoiditis at the lower end of the spinal canal may cause a great deal of low back and leg pain, although there is no distinctive syndrome.
Any trauma to the spine, including surgical invasive procedures, may lead in some cases to the development of arachnoiditis. Patients with this condition may have more than one predisposing cause. For example, myelography involves trauma to the spinal cavity to introduce a needle through which a contrast medium, which is an irritant, is injected, and is not uncommonly followed by a spine operation. Epidural injections involve the introduction of a needle to the epidural space. It does not penetrate the arachnoid membrane, nor is a contrast agent injected, but arachnoiditis has been reported following epidural injections.
Myelography is a diagnostic procedure. It involves the introduction of a contrast medium into the spinal column through a needle inserted into the lower spine. Once the contrast agent has been injected, several radiographs are then taken which provide views of the spinal cavity.
Myodil was the United Kingdom trade name for the contrast medium, which was an oily contrast agent for myelograms. It was introduced in 1941. It quickly became the standard contrast medium for myelography until the general acceptance of non-ionic water soluble contrast media during the 1980s. Myodil has not been marketed since 1987, when it was withdrawn from the market by its manufacturers.
Myodil was first marketed in the 1940s and was, therefore, issued a product licence of right when the licensing of medicinal products was introduced under the Medicines Act 1968. At the time of first licensing, the product information warned of the occurrence of post-myelography arachnoiditis in some patients. At the time of the review of the product licence of right, that warning was strengthened. It is the responsibility of doctors who use a product to ensure that they are fully familiar with the benefits and risks of any procedure or treatment.
Potentially, any medicine may cause side effects which may be minor or more serious. The Committee on Safety of Medicines carefully monitors all issues of drug safety and, where necessary, provides advice to doctors, dentists and pharmacists. Prescribing information and advice about side effects is available to doctors in the data sheets of an individual product, which are issued by the manufacturer of the product, and in the British National Formulary which the Department provides to all prescribers.
The incidence of clinically significant arachnoiditis associated with Myodil myelography is difficult to assess but has been estimated to be approximately 1 per cent. However, the relative contribution of Myodil, compared to other factors also known to be associated with arachnoiditis, is less certain.
I am aware that legal proceedings are currently in progress between a substantial number of patients, who claim to have suffered damage as a result of the use of Myodil, and Glaxo, the manufacturers of this product. The Department—in this case the Medicines Control Agency—complied with a High Court Order for discovery of documents relating to Myodil in 1991 but has had no further involvement in the case. My hon. Friend will understand that, in view of the judicial proceedings, 1 am unable to comment further.

Mr. Ian McCartney: In a general debate, it is interesting that all three major parties in the House are represented by their Front-Bench spokespersons. The reason for that is that we have received literally hundreds of letters from sufferers of arachnoiditis about the pain they are suffering and their inability to get adequate answers to the issues which have been raised.
On 25 March, I wrote to the Secretary of State for Health about a meeting of departmental officials, the Under-Secretary of State for Health, the Secretary of State for Health, hon. Members on both sides of the House and representatives of the action group to see whether we could consider in detail some of the complaints that have been raised about the Department.
I have had no confirmation so far from the Department of an agreement in principle to the meeting. Perhaps the Minister will say before the debate concludes whether in principle the Department is agreed that the meeting should take place and, on that basis, when it is likely to take place.

Mr. Sackville: I can give the hon. Gentleman, and the hon. Member for Rochdale (Ms Lynne), an assurance that we shall arrange a meeting at a time of their convenience.
I shall now make some general comments about injuries sustained as a result of medical treatment. If a patient suffers injury as a result of medical treatment, he or she can go to court to claim compensation. If the claim is against the national health service, to be successful the patient must succeed in proving that there has been negligence on the part of the NHS.
Where a patient suffers an injury as a result of negligent care or treatment provided by the NHS, it is right that compensation should be paid to that patient. However, the individual who is accused of being negligent also has the right to defend his or her professional reputation. Unless the alleged negligent action is so obvious as to be beyond doubt, as in other walks of life, if the injured person wishes to pursue the case, the dispute is resolved through the courts.
In a case such as that concerning Myodil, the Government's position has always been that it is a matter to be resolved between the drug companies and individuals, if necessary through the courts.
Magnetic resonance imaging, known as MRI, is a relatively new method of imaging, which has come into clinical use over the past 10 years. It is a non-invasive technique that enables good images of spinal cavity to be obtained but differs from myelography in not using ionising radiation. In many situations, MRI will be a suitable alternative to a myelogram, but there will be some situations in which myelography is preferable. For instance, some patients are unable to tolerate the enclosed conditions which are a feature of MRI.
There are about 78 MRI units in England—the number has already grown—but these are not sufficient to take on the present myelography work load; so it would not be practical to discontinue myelography entirely. I am glad to remind my hon. Friend that the then Secretary of State for Health announced early in 1992 a three-year programme of capital funding for medical equipment, including whole body scanners. Several scanners were purchased for England in the financial year 1992–93, and we expect that rather more will be acquired in the current financial year.
Clincians associated with treatment of the spine would wish to avoid invasive procedures wherever possible, and consultants would not go along with it if there were always


alternatives available. In the context of the current provision of MRI, clinicians have to consider for individual patients the balance between the risks of myelography and the risks of waiting for the availability of an MRI scan. The patient should be involved in that decision, through the process of securing informed consent.
Patients are entitled to receive sufficient information in a way that they can understand about the proposed management, any possible alternatives and any substantial risks. Patients must then be allowed to decide whether they agree to the treatment. This important principle of achieving informed consent has been highlighted in the patients charter.
As part of the recent NHS reforms, hospitals are responsible for providing efficient and effective health services to meet the needs identified by Health Authorities. In this context, and against the background of the imperative to minimise doses of ionising radiation in diagnostic radiology, provider units will decide whether they will make MRI available. Conversely, health authorities as purchasers of health care will decide how best to use their resources in order to meet the needs of their population. If purchasers are not willing to purchase myelography, it is open to hospitals to provide MRI as an alternative.
It is a sad fact that people have been seriously affected by arachnoiditis—the exact causes of which may be uncertain in individual cases. There is no known cure for

arachnoiditis, which can result in severe pain, and adequate pain relief should be an important part of treatment. Services specifically for the relief of pain are available in a number of hospitals.
To summarise, any invasive procedure in the spine carries a risk of causing arachnoiditis. Myelography is one such procedure, but an alternative—MRI—is becoming increasingly available. MRI can replace many invasive diagnostic procedures, including myelography, with the added advantage of avoiding ionising radiation. CT scanners were introduced about a decade before MRI and are now readily accessible; I hope that MRI will become similarly more accessible in the future.
I conclude by congratulating my hon. Friend on highlighting the problem and making more people familiar with the word. I take his point that warnings must be issued and that patients must be made aware of the degree of risk, which is uncertain but which exists.
When I started replying to letters on the subject, as a sufferer of back pain myself—although not of severe back pain—I realised how enormously distressing is the condition. It can dominate and even ruin people's lives. I hope that the programme of acquiring MRI scanners will accelerate and that—as my hon. Friend said—hospitals will take advantage of new flexibility in the way that they finance such acquisitions. I hope that the growth in the number of MRI scanners will help more people in future. Once again, I thank my hon. Friend for bringing the matter to the attention of the House.

Question put and agreed to.

Adjourned accordingly at twenty-seven minutes past Ten o'clock.